KULM, N.D.-Members of Hometown Credit Union often see CEO Tony Buerkley riding his moped to work to save gas. That's one of the benefits of running a financial in a small agricultural town.
Another is that residents are dedicated to the credit union-so much so that the $42-million CU has nearly doubled its assets in the last five years.
Buerkley said Hometown FCU has consistently claimed the majority of this town's savings business, generating loyalty over time through above-market deposit rates and affordable loan rates. It's a business approach that's placed the credit union at the top of Callahan's 2007 Return of the Member rankings in the Savings category for CUs between $20 to $50 million in assets.
The strategy benefits "everyone," members and the credit union, said Buerkley, an avid Harley-Davidson rider when he's not on his scooter.
"Our goal isn't to make as much money as we can. It's to keep savings rates a little higher than the market and loans rates a little lower so our members can actually stay on the farm," Buerkley said. "If they move to the bigger cities, that's business we lose."
Hometown's longtime rule had been to maintain a 4% spread. But at the start of 2008, that margin was reduced to 2.5% to 3% for Hometown FCU, Buerkley shared.
"Our loan volume is high," he said, pointing out that at times the credit union is 110% loaned out. "If it wasn't that high, we'd probably need a larger spread. We are maximizing all of our dollars so we can shrink the spread and still make at least 1% of our assets. That's our goal."
Most of Hometown's loans are agricultural, with much of the money in farm machinery. Loan APRs range from 6% to 8%, tiered based on security. First mortgages stand at 6% for 20 years. Car loans start at 5.5%, as do motorcycle and recreational vehicle loans.
At press time, a one-year CD was paying 2.6%, the "lowest rate in quite some time," Buerkley said. A six-month certificate was paying 2.3%, and a three-month CD was returning 2.5%. Checking returns 0.75%.
Buerkley believes in focusing more on loans than investments to maintain a workable spread, and admits the CU is fortunate to have such high loan volume. Even first mortgage business has not declined, the CEO said.
"The planting season starts in March and April, so that's when the majority of our money goes out. It slows over the summer, but money goes back out about now, at harvest time. Most of it comes back November through February. Then we start the cycle all over," Buerkley related.
Hometown has benefitted from a high loan demand for the last five years, Buerkley explained. If food prices continue to rise, loan demand will remain high, he predicted, and the CU can continue with its business policy aimed at keeping members in town and doing business with Hometown.
"We will continue to offer our members affordable loan rates and high savings rates," Buerkley said. "We are concerned about keeping the small farmer-especially the younger ones who face the high costs of getting started-on the farm."
