Persevering through Economic Adversity and Natural Disasters

Over the past 15 years, Visions Federal Credit Union has coped with an extended local recession and a 500-yr flood. But through these difficulties, the credit union its members and the larger economy have forged stronger ties that can weather any storm.

 
 

Visions Federal Credit Union, formerly IBM Endicott/Owego Employees used to service over 15,000 IBM employees. In 1992, IBM downsized extensively in the area, firing 10,000 employees over the course of three years. With the announcement of IBM's continuing plans to close other large facilities in the region, Visions decided to diversify its membership. Moving from a single-SEG to a multiple counties charter focusing on underserved areas was a key strategic decision that resulted in later success. Yet, the IBM departure and declining local economy negatively affected all of their membership ¨C new and existing. Frank Berrish, CEO, recalls, "Our consumer loan portfolio didn¡¯t grow for 10 years." As they diversified their membership, the credit union did diversify their loan portfolio, expanding over time into mortgage lending, commercial lending and participation loans.

The local community endured a recession that lasted 13 years: from 1992 to 2005. During that time, the largest bank in the county went under. Within the new commercial lending focus, the credit union was able to provide alternative financing to help the community members who had been using the bank. With diversification and time, Visions total loan portfolio has nearly tripled from $335.2M at June of 1992 to $1.2B at June of 2008. No longer totally dependent on consumer loans, those early decisions completely changed the complexion of the credit union.

Visions, through its senior management team, has become increasingly involved with local non-profits. Recognizing the need for additional funding as the local economy declined, the credit union donated (and continues to donate) time and money towards organizations like regional museums, the Boy Scouts and the local Philharmonic Orchestra. With devotion to the community never in doubt, the credit union also successfully navigated the largest natural disaster, a òÁ year" flood in 2006. Three employees' homes were destroyed and many others had serious damage. Even with branches underwater, the credit union was the only financial institution that remained open. Berrish recounts, "We are the largest real estate lender in the area, we had the largest stake. We took out full page ads in the newspaper to tell the community we were there to help". With a $60M exposure, the credit union granted forbearances to any who needed them. Write-offs from the flood were less than $250,000 from that $60M portfolio.

After the flood, Visions actively granted home improvement loans and concentrated their efforts to help members was repaid with loyalty. For the last three years the local newspaper has rated them the top financial institution for service, for mortgages and investment services. Berrish views Visions as an Innovator. He said, "We revise, revisit, change our operating model over time." With experience handling both economic and physical adversity, they are uniquely situated to weather the current economic storm, and others in the future. With New York State nearly bankrupt and high taxes taking their bite, the everyday membership of the credit union has increasing difficulties. "Baby boomers, he said, are looking at their 401(k)s aghast". The former IBM employees are receiving only 50 ¨C 60% of their pension income and in the face of soaring healthcare costs are not doing well financially. In response, Visions has increased the number of seminars for retirement planning. They have also aggressively moved into Reverse mortgages. Coupled with this focus on helping current and future retirees, Visions is now courting its future membership: Gen Y. They are involved with a new student lending CUSO, CU Student Choice. Internally they are developing products and services to appeal to the "millenials" and expanding their delivery channels into local universities.

Over the past 15 years, Berrish credits his strong belief in diversification as a foundation for their success. From diversifying the membership and communities you serve to recalibrating product offerings, a credit union needs to hedge against known and unknown factors. With their intense focus on varying demographic groups, Visions appears well-positioned to continue that success into the future.

 

 

 

Sept. 22, 2008


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