The Heart of America

Near-record ROA. Loan growth. Addition of services. What the industry can learn from a Midwestern credit union.


Like many credit unions, Mid American Credit Union ($160.8M, Wichita, KS) began the year in survival mode. The credit union was unsure how the economic recovery and share insurance premiums would affect its balance sheet and budget.

“We tried to be conservative in our outlook but positive in our approach,” says Jim Holt, CEO of Mid American.

Despite uncertainties, the credit union turned out a stellar performance. The credit union had one of its highest ever return on assets in the fourth quarter of 2010. At 1.22%, it was significantly higher than the national average of 0.51% for the fourth quarter. In fact, Mid American has increased its ROA each quarter of 2010.

MidAmerican Credit Union, ROA, 4Q10
Source: Callahan's Peer-to-Peer

Mid American also grew its portfolio across multiple loan types while remaining 110% loaned out. In the fourth quarter, new autos and other real estate were the only areas in which the credit union did not post positive growth, which mirrors a national trend of decline. The credit union’s relationships with its local dealers helped it to post strong growth in used auto loan. This trend, too, mirrors the development of other credit unions’ portfolios as the industry generates more auto loans across the country.

MidAmerican Credit Union, Loan Growth, 4Q10

Source: Callahan's Peer-to-Peer

“We made more real estate loans this year than any time in our history,” Holt says. “It is going to be difficult to improve on this year.”

How did the credit union achieve such success? Precise planning.

“We had a strategic plan, and we wanted to stay as close to it as we could,” Holt says.

The credit union identified where it could cut back, if necessary, without damaging member service or the institution. These were the initiatives the Board could support waiting on until the economy turned around.

Then there were the high-priority goals; those, too, required Board support.

“We spent 2009 getting our Board to understand certain goals,” Holt says. “We put together an action plan of six things we wanted to implement in 2010.”

As the credit union’s 2010 financial performance indicates, the action plan included:

1. Increasing assets.

2. Growing capital.
“We didn’t want to grow our assets so much that we ran away with capital,” Holt says. So the credit union set its 2010 capital goal at 7.5% with a long-term goal of reaching 9-10%. 

3. Improving ROA.

4. Adding business services.
The credit union dedicated 2009 to hiring the right people, onboarding and educating staff, and developing policies and procedures for business services. By 2010, the credit union was ready to implement its program.

5. Managing the loan-to-share ratio.
“We decided 125% was the max we could lend and be comfortable,” Holt says. “We actively managed that through pricing of certificates, shares, and loans.”

6. Growing mortgages.

The credit union started the year with lofty goals, but a combination of local economics and record-low interest rates helped it achieve them. Wichita’s major industries include aviation, agriculture, and oil. One-third of its economic drivers took a nose dive in 2009, but it turns out the companies that suffered most from growth problems and layoffs didn’t include the members the credit union primarily served. For example, select employee groups such as LearJet and Coleman were “pretty steady,” Holt says.

And the record-low interest rates turned out to be more of a benefit than the credit union predicted. It turned to its 250-strong dealer network of indirect lending relationships to identify demand in the auto market; it doubled its business lending; and it joined an area mortgage CUSO. 

“We are a fairly aggressive lender,” Holt says. “By managing and making sure we were making solid loans, it [the rate environment] turned out to be good, and we were able to make a substantial return on the loans.”

So what’s ahead in 2011?

The credit union will forge ahead in its strategic planning with an eye toward building for the future. It will lay groundwork in 2011 to open a new branch in 2012 and establish a broader footprint. It also wants to develop a “world-class member service program” in 2011 for launch in 2012. And the credit union is currently putting the finishing touches on a video testimonial series that touts the benefits of Mid American to potential employer groups and prospective employees.

If the credit union philosophy is “people helping people,” then Mid American wants to leverage the power of its people. “Don’t just take my word for it,” Holt says of the benefits of credit union membership. “Listen to our members, our SEGs, our employees.”





Feb. 28, 2011


  • Team, the attached article may be worthwhile reading for you and your customers. FYI!

    Hal Bentley