MILWAUKIE, Ore.-Lending its billionth dollar just wasn't enough for Clackamas Federal Credit Union.
The $216-million CU topped $1 billion in lending late in 2011, and CFO Andrew Vahrenkamp said CFCU has also experienced its "biggest January ever."
"We are doing really well, and usually January is a down month," he told Credit Union Journal. "Normally people want to pay off their loans in January and start the year fresh, but this year we are seeing new loans."
Clackamas FCU is growing in almost every lending area, Vahrenkamp noted, especially commercial (lines of credit, various secured products and business credit cards), real estate and credit cards. Auto lending, he said, is steady.
Vahrenkamp credited a strong focus on front-line personnel for driving loan growth.
"We are trying to find solutions for members rather than just take orders, and it is paying off," he said. "Also, we ramped up direct marketing to members starting in earnest in March last year. It was an effort to get our brand out there consistently, and members are finally looking at us for more than just car loans. We have had tremendous share of wallet and loyalty for car loans, but now we are seeing the business side take off."
As part of its marketing efforts, Clackamas designed a mailing matrix that sends monthly offers for products and services to targeted households. By repeatedly targeting members, CFCU reinforced its brand as "the place to go" for financial products and services.
"Our results have grown over time, as we would expect, since it takes time for a direct mail campaign to build that level of brand recognition," Vahrenkamp said. "In addition, we added targeted banner ads within online banking. We increased product advertising on our website with more frequent invitations to apply online."
The payoff: CFCU has had four consecutive months of loan growth for the first time since before the recession.
Clackamas prices its loans "competitively," Vahrenkamp said, adding in a few categories it is the price leader in its market areas. He said it typically is "on par" with other CUs in consumer and real estate lending.
"Much of our lending success is due to member loyalty," he declared. "According to a recent analysis from the Raddon Financial Group, we are in the top 20% of credit unions nationwide in terms of our percentage of members' overall loan dollars, or share of wallet. That type of loyalty helps bolster growth dramatically."
Although some CUs are leery of commercial lending, Vahrenkamp said Clackamas has a "strong" commercial lending team with "extensive experience" in its market. "We are also well below the cap, and demand is so high that we are able to get the right deals with the right pricing."
Milestone Loan
The one-billionth dollar was lent to longtime members Jeffery and Melinda Brown, who Vahrenkamp said have had several loans with the credit union. The Browns were awarded an iPad2.
"They were excited, and it was nice because they are great members who have everything with us and refer their family and friends," he said. "It was good to see the billionth loan dollar went to a couple that has been with us for a long time, is very loyal and very active."
Prior to joining Clackamas FCU as CFO, Vahrenkamp said he worked with credit unions across the country and has studied member loyalty. He said he has been "consistently impressed" with the loyalty Clackamas generates from its members.
"We are lucky to have capital and the ability to grow, as opposed to a lot of our peer credit unions are trying to restore their capital position. We are in full bore growth mode."
The capital ratio for Clackamas is 10.5%, and Vahrenkamp said its "consistently positive earnings" gives it the ability to fund further expansion.
As for the fears that too much growth is a bad thing, he said "full bore" growth "does not mean compromising our principals. We do not do indirect lending, for example, nor are we taking on undue risk in deeper paper," he said. "We are at a remarkable time in our industry: demand for our services has never been higher. Oregonians, and Americans in general, are actively looking for banking alternatives in a way they haven't in a very long time. Investing in growth and market share now will allow us to be here to provide for our members for many years to come."
Sowing Seeds For Success
Vahrenkamp said he expects the credit union to continue to expand in 2012. CFCU recently opened a branch in rural Sandy, Ore., which previously did not have a credit union. The new branch has done in six weeks what management expected in 60 weeks. CFCU will open another branch in West Linn, Ore., in April, which will give it seven branches.
For months in advance of the opening of the Sandy branch, Clackamas "inundated" the community to ensure recognition, Vahrenkamp recalled. On the first day of operations, prospective members were lined up outside, waiting for the doors to open. At one point on the first Saturday, 36 members were on the waiting list, despite the CU having doubled its staff to handle the expected traffic.
Through Jan 31, loans at the new branch already were past the June goal, and deposits past the 2012 total goal. Vahrenkamp said the key was promoting the credit union concept in a town that had none. And it helped that the "Occupy" movement and bank fees for debit cards were attracting headlines.
"Again, we are lucky to have had the flexibility to be able to respond to the economic environment, and in 2012 we will continue what has been successful for us," he said. "We will continue our marketing outreach and we continue rewarding frontline staff for cross-selling."
