EUGENE, Ore.-An aggressive, proactive approach being taken by the $919-million Oregon Community CU here has led to a strong increase in lending.
The strategy, which includes asking members for their business, an extensive commitment to training and what management describes as "friendly competition," resulted in $53-million in loans during the first quarter of 2010 compared to $44-million in Q1 2009. Net income for the same two quarters, excluding NCUA assessments, jumped to $1.7-million from a loss of $500,000.
According to OCCU CFO Russell Dennick, the increased loan numbers are not just the result of an improved economy. "We started slow in January and February, but March spiked up and April was off the charts," he reported. "In March we funded $25-million in new loans and April was $35-million, which is way beyond our typical months. In the last couple of years we have been netting roughly $2 million to $3 million net increase in a month, but April was a net increase of $17 million from March, which already was a good month. And we had high paydowns in April as people got their tax money."
Oregon Community CU had set a "pretty large" 2010 goal of 6% loan balance growth. Through May 25, it was on pace to hit 8%, Dennick said. He noted OCCU does not offer credit cards or member business loans, two products which are "pretty hot" right now on the market.
"As deposits have come in I have been investing in overnight funds, but because we have gotten more aggressive and loaned it out my money is doing a lot more work for me than it was before-it is earning a lot more than a quarter-percent from overnights," he declared. "Part of the aggressiveness is we knew we had to make a larger margin to overcome the NCUA assessment. We have had a $4-million turnaround in bottom line income from last year."
CEO Mandy Jones added the improvement is partly due to a change in OCCU's culture, including a training program developed in-house in 2009.
"We wanted to go beyond sales to become the members' most trusted financial advisor-and we can't be the most trusted advisor if we don't ask what other products we can offer," said Jones.
Rosemary Pryor, VP of marketing and strategic planning, said a decision was also made during 2009 to help members move past the economic downturn.
"We needed to engage members by not just responding to them, but identifying their needs and what we can help them with," Pryor said. "When the economy began to improve, we wanted to make sure banks wouldn't come after our members. We wanted to be one of those credit unions that survived."
The change to a proactive sales culture and the training were a package deal, Jones and Pryor agreed-if any elements had been left out, "we wouldn't have been as successful," Pryor asserted. "We need members not only to be knowledgeable about our products and services, we need them to be comfortable with us being their financial advisor. We had every single member of the staff go through the training, from the CEO down, and they all came out on the other side with expectations on how they will personally contribute to our success."
The 360-training went on for several months on a weekly or bi-weekly basis from January through April of this year and will be ongoing moving forward. Jones said Oregon Community considered outside training programs, but opted instead to base it its own years of experience with members.
"We cherry-picked the pieces that worked for our organization and it was developed by employees for employees," Jones said.
Pryor said an early, key was finding was "Go For No," a 75-page book by Richard Fenton and Andrea Waltz. She said it became a valuable resource because the authors discussed how many times in sales one hears "no" before finally getting a "yes."
"It is about helping people get over the fear of rejection," Pryor said. "Some members don't want to talk about their loans, and employees were afraid of talking to them."
Added Jones: "Employees were assuming members didn't need a product without ever asking. They had to be taught to ask to allow the member to make the decision. We are not a good, trusted financial advisor if we make the decision for them."
Pryor said the training went beyond a list of a given product's or loan's features to train the staff on why a member would benefit from it. "This is not rocket science, but it is something we took the time to work with the employees so they believe in the benefit for the members."
