Krishna Bhanji , Issur Danielovitch Demsky, Allan Stewart Konigsberg, Jennifer Anastassakis, Natalie Hershlag ... any of these names ring a bell?
No? Let’s try again. How about Ben Kingsley, Kirk Douglas, Woody Allen, Jennifer Aniston and Natalie Portman? For these Hollywood stars, a change of name provided a fresh start and signaled to others great things to come. Such was the case for Oregon’s Unitus Community Credit Union.
Known as Oregon Telco until 2002, the arrival of current CEO Patricia Smith and a subsequent name change ushered in the beginning of a larger institutional turnaround. In an ongoing process that continues today, the credit union began assessing strengths to build on and weaknesses to overcome.
There was a need for a shift in culture, Smith says, and as the credit union developed specific team skill-sets internally, it also identified external community objectives to better connect it with its membership. It embraced a sales culture, learned how to “ask for the business,” and utilized a special Personal Performance and Review (3PR) program to align goals across the institution, from teller, to manager, to CEO.
So what did the credit union experience as a result of these changes?
When Callahan profiled Unitus in 2006, the Portland-based credit union had roughly $660 million in assets and 60,000 members. Even with the following year’s economic hurdles, the blows of assessment costs, and nearly a $4 million loss from its corporate credit union, Unitus has stayed the course and prospered in many areas, with roughly $832 million in assets and 71,000 members as of 3Q 2010.
According to Callahan’s Peer-To-Peer Software, Unitus has grown its non auto and real estate loans by 13.97% year-over-year as of September; regular shares and deposits grew by 5.62%. Its amount of delinquent loans also fell by 47.37% over the same period.
“We’ve paired back some expenses and went back to the basics, making the money necessary to recover from extraordinary hits” Smith says. But the credit union is in no danger of regressing to the “order taking” transaction-based nature of its past.
In the past four years, Unitus has made extensive headway in its internal focus on core deposits, increasing checking account penetration, which once hovered around 35%, to more than 51% today, Smith says. “We do some tweaking of the product every year, but most of that has been the result of expanding our sales and service culture among the staff using the 3PR program.”
The credit union also revamped its deposit mix to control cost of funds, and now uses profitability analysis to determine which core services are being used by which members and how to make those specific service combinations profitable.
“If a member is going to have a good lasting relationship with the credit union, it involves opening up more than a CD or savings account,” Smith says. Strategically slowing deposit growth to roughly 5% a year also allows Unitus to manage its capital levels (currently at 9.4%).
Growing from just one location at its start to eight branches today, “We have really learned how to introduce ourselves to the community over time,” Smith says. As a community charter, those external relationships are something the credit union continues to build on. “Right now, we’re looking for trends, as our membership profile has gotten younger,” she says. Staying in close touch with the community allows the credit union to better assess member’s needs and creates opportunities to meet those needs in innovative ways.
One example is the credit union’s “Choose Local” credit card product, developed in partnership with chooselocal.com and the Portland mayor’s office. The larger campaign encourages members to support local businesses, and 50% of the net interchange from the card benefits public schools via the local education cabinet.
Unitus also participates in a program through its CUSO that now generates approximately 50 auto loans a month for the credit-damaged consumer. The first step in the program is working with the member to provide financial education and budget assistance, which helps the member determine if they can afford a car. If they can, then the credit union helps them find a reliable one, Smith says. The credit union underwrites the loan for approximately one-third the normal rate for borrowers in that credit range. It also installs a GPS in the car; if payments aren’t made, the car won’t run. In the past two years, the credit union has helped members with more than 800 loans, yet has suffered less than $50,000 in losses.
Blossoming from an institution with just one location and limited resources, (“we didn’t even have an external business sign until 2001” Smith laughs,) to a stable pillar of financial services in its local community, the strong foundation Unitus has set in place over the past few years gives it and its members a bright outlook for tomorrow.