New Loan Program Helps Propel 36% Annual Share Growth at $281M Credit Union

Loan growth has been great, said Tammy Hansen, vice president of lending at Cyprus Credit Union, Magna, Utah. As of first quarter 2002, loan growth was at about 33%. According to the latest second quarter data from Callahan and Associates, that figure is up to 37% over last year. How, when many credit unions are experiencing high liquidity and striving to increase loan portfolios, did Cyprus become 92% loaned out? Hansen explained that construction loans and the introduction of a first mortgage program made the difference.

 
 

"Loan growth has been great," said Tammy Hansen, vice president of lending at Cyprus Credit Union, Magna, Utah. As of first quarter 2002, loan growth was at about 33%. According to the latest second quarter data from Callahan and Associates, that figure is up to 37% over last year. How, when many credit unions are experiencing high liquidity and striving to increase loan portfolios, did Cyprus become 92% loaned out? Hansen explained that construction loans and the introduction of a first mortgage program made the difference.

Construction loans weren't even a blip on the credit union radar screen a few years ago. Even today, first mortgage programs are only taking flight at many CUs. Despite a booming homebuying market in 2001, (which continues today) the CU share of the total $2 trillion real estate market remains at 2%, according to Callahan and Associates 2002 Mortgage Research Report. Making headway in the construction lending area could provide an opportunity to branch out from the home equity market, which makes up the bulk of the CU portfolio.

"We do a huge business in construction loans," said Hansen. "In February we were at $1.5 million, and now we're at $9.5 million, so we grew tremendously."

Cyprus decided to grow their RE portfolio from 5% to 10% (or reach $20 million total) and made a serious commitment to do so by hiring a construction loan manager, said Hansen. "Janet Zimmerman started with us about a year ago, and she just went out and made a name for us in the community," said Hansen.

Zimmerman met with contractors and real estate company officials that sold land to individual buyers and developed relationships with them that resulted in their recommending the CU to finance the purchase. Membership restrictions aren't a problem. Prospective members can join the Community Recreation Association for $5, which qualifies them to join the CU. But it's not something they pursue aggressively, Hansen said, because of the sensitivity to other CUs. Cyprus does market aggressively however, especially on radio, with a catchy jingle about the CU that's well known, she said. Soon, they will include TV ads as well. The total budget is near $400,000, she said.

Like construction lending, the first mortgage program hasn't reached its full potential yet, either, but it is taking off. Building loans are 3.4% of total loans, at $9.5 million; first mortgages are 3.3% at $9.4 million. "We didn't have anything on the books and in eight months, we did that," said Hansen, obviously pleased.


The above case study is one of several new appendices soon to be added to Callahan's popular 2002 Credit Union Mortgage Research Report. The expanded study will be released in September for no additional charge to all previous purchasers of the study and will be updated with the latest second quarter 5300 data. Order your copy today!

 

 

 

Aug. 26, 2002


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