LEWISTON, Idaho -
Today, Guenther is CEO of the same credit union and much has changed. Assets now top $27 million, there is team of 12 employees, and it has pulled out of the garage and operates out of a facility of its own. But perhaps most impressive is the credit union's 2006 return on assets of 2.98%, fourth highest among more than 1,800 credit unions in the $25-million to $100 million asset range that collectively returned .68% during that same year.
Originally chartered in 1939 to serve local school district teachers, Lewis Clark Credit Union through the years expanded to a base of more than 30 select employee groups until an early 2006 merger provided its second branch and a community charter to serve a five adjoining county area.
Like many credit unions Lewis Clark Credit Union places a great deal of emphasis on the third piece of the "Not For Profit, Not For Charity, But For Service" motto.
"Our member service makes us different," said Guenther. "We have 12 employees with good manners who are friendly and good at remembering names-our elderly members particularly enjoy stopping by the branch for a cup of coffee and chatting with us."
But while elderly members enjoying a visit may make for a pleasant day, the credit union is well aware that if there are to be future days it must attract younger members. "We think it is important to get kids into the credit union while they are young -they really are our future. When members have babies, we contribute $5 to open a new account for the baby and send a new-baby letter," said Guenther.
The attention to old-fashioned manners and the emphasis on the newest members appears to be paying off. At a time when many credit unions are experiencing shrinking membership, Lewis Clark Credit Union continues to add-topping 5,600 members on March 31, with significant future growth potential. Currently less than 5% of total membership potential has been tapped.
You Make The Call
Lewis Clark CU employees are empowered to make decisions. For example if a member makes an error in their checking account and incurs an overdraft fee, employees may offer to "split the difference" with the member if they have an objection. Or, in cases of a delinquent loan payment, a team member can help structure a repayment plan. "These simple steps make a member immediately happy and build loyalty while resolving a problem at the same time," conveyed Guenther.
To further foster the positive work environment and encourage continual employee contribution to Lewis Clark Credit Union objectives, an all-employee incentive plan was launched in 2006. Based on specific return and growth objectives, credit union performance is measured quarterly providing employees an opportunity to earn up to 5% of their gross salary on an annual basis. According to Guenther, employees are learning how their tasks directly affect each credit union goal, providing an incentive to understand the overall operations at the credit union and become more sales-focused. "Because we have a target of 2.75 products per member, employees are more inclined to see what is needed to increase a particular member's product penetration," explained Guenther.
Lewis Clark Credit Union recorded a 5.63% net interest margin as a percentage of average assets during 2006, significantly higher than the 3.96% for the NCUA peer group. The credit union's average loan yield was 8.78% compared with 7.04% for the peer group, attributable to a 64% concentration in the automobile portfolio contrasted with an industry average of 35%. Though many consider this loan profile riskier, the .78% delinquency ratio compares favorably with the 1.21% NCUA peer average.
A risk-based lending program deployed five years ago allows Lewis Clark Credit Union to aggressively price higher risk credits.
"We maintain 20% of our loan portfolio in 'D' and 'E' credit and we have no collector," said Guenther. "Rather, every employee is trained to perform collection functions and actively work our delinquency list. When a delinquent member comes in, the employee knows the delinquency status as well as their credit score-and can promptly ask for the payment. In many cases, the member makes the payment immediately."
In late 2005 an indirect lending program was added through Indirect Lending Technologies, LLC. That program has generated over $1.2 million in loans and approximately 60 new members. "We limit our indirect business to 'A' and 'B' paper to reduce our exposure through this channel," Guenther told the Credit Union Journal.
All lower-grade credit loans are originated directly through the credit union providing visible assistance to those who may not as well off in the community.
Additional recent member services have also been rolled out to bolster fee income and include a courtesy pay program and CUNA Mutual's GAP insurance program. Electronic member services have also been expanded through an enhanced debit card program as well as the addition of e-statements and e-bill payment.
Though the communities served by Lewis Clark Credit Union are small, banking competition is still a reality. However, a solid sense of community exists perhaps making the competition less stressful than one would find in large communities.
"Perhaps we don't feel the sting of the cut throat competition like other parts of our country," Guenther said. "Many times we work together with area banks for the mutual benefit of a member who might also be their customer. Since we are in small communities, we are all neighbors, friends, relatives and former school mates."
That includes hosting Chamber of Commerce functions with the staff from local banks.
LEWIS CLARK'S MEASUREMENTS
The criteria Lewis Clark Credit Union uses to measure itself: Asset Growth, Loans/Assets, Number of Members, Products per Member, Delinquencies, Operating Expenses/Assets, Net Worth Percentage, Credit Card Growth, Branch Goals Based On Debit Card Growth, Home Banking Growth, E-statement Growth, Credit Union Community Events.
LEWIS CLARK'S NUMBERS
Total Assets $26.6 million
Members 5,513
ROA 2.98%
Capital to Assets 15.44%
Del. Loans/Total Loans 0.78%
Net Interest Margin/
Average Assets 5.63%
Net Operating Expense/
Average Assets 3.14%
FTE Employees 11.0
Fee Income per Member $50
Loans/Shares 107.3%
SOURCE: NCUA, 12/31/06
