Des Moines Police Officers’ Credit Union ($39.0M, Des Moines, IA) knows how to treat its members while still earning revenue. The SEG-based institution’s third quarter financial performance makes it an example to credit unions across the country. As of September 2012, its 12-month member growth was more than twice that of its state peers’ — 8.16% versus 3.85%, respectively — it captured more than three times its potential member market share than credit unions with $20-50 million in assets — 15.91% versus 4.98% — and its average member relationship was more than three-and-a-half times that of all credit unions nationally — $23,825 versus $6,302.
Nearly 42% of members had a share draft account with the credit union, 31.52% had an auto loan, 15.30% had a credit card, and 3.35% had a first mortgage. Its loan-to-share ratio of 72.95% stacked up well against its asset-based peers’ ratio of 56.21%, and its 0.34% delinquency was significantly lower than that of its asset-based peers’ 1.41%.
The credit union was able to post such impressive numbers while keeping its expenses in check. As of September 30, 2012, it had one branch, six FTEs, and a 69.9% efficiency ratio compared to 10 FTEs and a 92% efficiency ratio for its asset-based peer group and 23 FTEs and 73.7% efficiency ratio for credit unions in Iowa (note: the efficiency ratio quantifies how well a credit union is using its expenses by measuring how much the credit union has to spend in order to generate $1 of revenue; a lower value is better).
Des Moines Police Officers’ Credit Union ranked No. 1 for third quarter 2012 in Callahan’s Return of the Member [ROM] Index, which provides a comprehensive scoring system of member value that looks beyond the traditional safety and soundness issues covered by NCUA’s CAMEL scoring and other regulator examinations. ROM calculation uses 5300 Call Report data to capture a holistic view of a member’s relationship with the credit union and focuses on three core functions: savings, lending, and product usage.
ROM ranks credit union performance according to asset-sized peer groups, and the Hawkeye State credit union consistently ranks in the top tenth percentile for its asset base.
TOP 15 ROM LEADERS
Data As Of June 30 For $20-50M Asset Peer Group
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Here, Janet Lintin, CEO of Des Moines Police Officers’ Credit Union, talks about deposits, loans, and member engagement.
How are you engaging members?
Janet Lintin: Having the right people on staff is the key. Making sure they give each member the kind of service they want, which might be different for every member, is critical. Assuring the member they will take care of it, whatever “it” is, makes for loyal members.
We have been more intentional about connecting with our members by sending cards for life events, sending communication when loans are paid, and handwriting thank you notes for new accounts.
We visit worksites regularly. When we attend roll call for a particular department, invariably one of our members will speak up and advocate for our credit union. What can be more engaging than that?
Are you focusing more on the loan side or deposit side?
JL: We want the full relationship so we ask for it all. Helping our members understand how we can benefit them with our products is only a part of our focus. Helping members understand how we can make their lives easier by fully explaining our electronic services and communicating our commitment to take care of them is perhaps more important.
Like all credit unions, we could use more loans to offset deposits. We have to work hard at this since we have a closed field of membership and our opportunities are limited. When we take the loan application, we look at their full financial picture and make recommendations on how we can save them money. If another guy’s deal is better, we are not afraid to say so and ask them to come back next time around.
Tell me about your philosophy on pricing: Are you focusing more on offering competitive rates for savers or borrowers?
JL: Again, we believe we have to be competitive with both savings and loans rates. How can you possibly develop deep long-term relationships if you don’t take care of the full relationship? My borrowers won’t always be borrowers. As many age, they become savers. My savers will likely need a loan down the line. It is important that we give them a reason to do business with us, no matter what their needs or financial leanings.
How are you encouraging members to make your credit union their PFI?
JL: Lots of people don’t understand the breadth of service our little credit union can offer. We provide education that doesn’t necessarily push a particular product or service or pay-off immediately. We send a monthly electronic newsletter that offers general financial education, and we offer financial education videos on our website. Neither vehicle pushes our products or services directly, but they help establish us as financial experts. We hope this education will encourage members, and potential members, to think of us first when they need a financial service.
Beyond that, we build trust by greeting members by name and doing the right thing with regard to their accounts.
Have you launched a product to entice members to open a checking account?
JL: We have just one checking account. It has all the bells and whistles and it pays a decent dividend. We can adjust it to fit almost any member’s needs. We offer all of the companion services for free, including electronic bill pay, ATM transactions, eStatements, mobile banking, and debit card round-up. Our growth in checking is mostly due to our staff consistently asking members why their checking account isn’t with us.
Have you launched a marketing campaign that promotes your credit union?
JL: Our marketing is heavily word-of-mouth. We are fortunate to have a great group of ambassadors who spread the word to their co-workers about the credit union. Other members also do a great job of selling their credit union. Our board of directors has been active in recruiting members at special events; they even flip burgers at our member appreciation days.
The responsibility for coordinating activities falls to our part-time business development specialist. Bringing her on board was one of the best strategic decisions our organization made. It assures the business development has someone’s full attention at our small credit union.
Do you offer a patronage dividend or other type of dividend sharing?
JL: No. We try to provide a consistent return to our members by offering them excellent rates all year long. We hope they are not compelled to shop when they have a need because they know we are market leaders.
In today’s environment, lots of credit unions have strong share growth but matching that with strong loan growth is challenging. How do you encourage members to take out loans?
JL: This is a challenge for every credit union, ours included. We must dig deep with our closed membership to find opportunities. We expect lenders to use a loan request as an opportunity to talk about how we might be able to save the member money by refinancing other loans. We use our data processing system [from CU*Answers] to target loan promotions (read more about the credit union’s Free in 3 and Free and Clear promos).
Why do you think you’ve had such success in growing both your shares and loans?
JL: Our members trust us. Being from the public safety sector, they are comfortable doing business with a credit union that serves people they work with daily. The guy or gal who’s got your back on the street will likely have your back at the credit union. This resonates with them. We don’t get every deal, but we are at least given an opportunity for most all of our members’ needs.
How are you onboarding new members?
JL: We have people on staff who present the information members need to establish a new relationship. We walk them through home banking, mobile banking, and other convenience services, including shared branching. We understand convenience is a primary consideration for all consumers. If we don’t take time to do this, our single location becomes a limiting factor in growing that relationship.
We follow up right away with a welcome card or email. After a couple of weeks we call to make sure they’ve received their cards or payroll has kicked in, which gives the new member an opportunity to ask questions. We take time to discuss any needs we uncovered during the initial meeting. The members seem better able to absorb product details at that time than during that initial meeting, and after three points of contact, we are a friend instead of a stranger discussing their needs.
How do you encourage members, especially new members, to take full advantage of the credit union’s products and services?
JL: Let’s face it … members are bombarded by communication so emailing, sending marketing pieces, or posting something to the website is not always fruitful. We need to be ready with solutions when the member has the need. Our staff persons are light on their feet when it comes to uncovering needs and offering solutions. Beyond that, they like the services we offer and they use them. They frequently relate their own experiences to members. Personal testimonials go a long way in assuring members our product is right for them. As I said before, a great staff is the key.
Do you have a sales culture?
JL: We have a helping culture, but then again, that is a sales culture, isn’t it? It is often impossible to help a member without offering a product or service solution.
We do not have sales quotas but we do spend time helping our staff understand that our budget and their compensation require that we generate a defined loan volume and generate a defined membership growth and checking penetration while assuring low delinquencies and healthy ROA. If we meet our budgeted targets, they share in a corporate incentive plan. If we don’t, they don’t.
We hear a lot from smaller credit unions that it’s difficult to compete today, but you’re showing that it can be done. What is your secret?
JL: We run efficiently and every staff person must be a heavy lifter, so we are picky about whom we hire.
We keep up with technology. We have a culture of continuous improvement and forward movement. Without these three things, it is tough to motivate members to stay with you and, more importantly, to motivate potential members to join your ranks.
We want the biggest bang for the buck when we choose vendors. That does not mean being cheap, rather it requires finding vendors for which there won’t be a financial barrier to upgrading services to our members in the future. Our chosen vendors must exhibit energy and growth so we can assure we are partnering with organizations that will be an asset rather than a barrier to our success. [The credit union’s vendors include CU*Answers, TMG, and IPay, LLC.]
I’d be remiss, though, if I didn’t point out that we have a great membership base. Its loyalty has made us prosper. Any small credit union would benefit from engaging with targeted groups the way we used to in the days when SEG development was king. Building relationships means everything when you are the little guy.
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