MIAMI - In a sea of red numbers at many credit unions, one that continues to perform in the black is stressing the value of exploiting a niche, leveraging related fee income, and cautious underwriting.
“Our CEO, George Joseph, has been very careful–conservative but not too conservative,” said John Holt, executive vice president of Dade County FCU. “We were being careful because we knew reality would someday set in. We didn’t partake in riskier things.”
Dade County FCU is still writing real estate loans in this South Florida market, “but we’re being careful,” Holt stressed.
That cautious underwriting has always paid special attention to verifying applicants’ incomes, he added.
But it isn’t real estate lending that drove the $1.1 million in net income DCFCU reported for the second quarter. “Our strength is in auto loans,” Holt said. “We’re very strong in that market.”
The $430-million credit union hosts auto sales in its own parking lot every month.
“We have a very large parking lot. We can fit 200 cars,” Holt said. “The dealerships all participate. We’ve done well with that. People are looking for more fuel-efficient autos.”
Dade County FCU markets each sale through a direct mail to its 83,000 members.
“We sell 70 to 90 cars in a matter of a day or two,” Holt said. “Lots of dealers participate. We also have a very good rate, but it’s really something we are so good at.”
The credit union also offers a service called D.A.D., or Dade Auto Desk, in which it finds the vehicle the member wants, including the exact color and style.
Additional income is being generated from a payment protection product.
“We sell insurance on all our loans,” he said. “We are so strong in that. We earn a lot of non-interest income and that has really helped us as well.”
Holt’s advice for other credit unions looking to better weather the current economy: “I think you have to find something you’re really good at, and then when you do, carefully market it. You also need to find another source of income for the credit union, such as fee income or insurance.”
“And you have to be careful of cost,” Holt stressed. “Credit unions are there to help people but you also have to make money.”
And perhaps most important, Holt advised, “Don’t back off on marketing.”
“I think in any financial institution you always need to think ahead of the next downturn,” he added. “You always have to think of an economy that can downturn in the future.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
