AUSTIN, Texas-Expansion into new markets, a new commercial real estate program, and a lack of consumer confidence in big banks has led to remarkable growth by one credit union here.
Austin Telco FCU has exploded over the last year, growing its asset size by 24.4% from Nov. 2007 to Nov. 2008. Through October, the $664 million ATFCU had originated $97-million worth of loans in 2008, fully one-seventh of the CU's current size.
"I don't know that there is any big secret. We pay decent rates and we've opened a bunch of branches in the last year or two so we have a lot of locations," said CEO James Poplin. "Our total loans are up 17.5% over last year, which is pretty good growth."
The credit union expanded to a community charter four years ago and has been building a number of new branches across the capital city over that time. While the economy in much of Texas has held up pretty well during the nationwide recession, the financial crisis took its toll on large financial institutions-much to Austin Telco's benefit.
"The deposit growth is even more rapid than the lending growth. A lot of deposits that we are taking in are from the big banks," Poplin noted, adding that its strong dividend and certificate rates, such as 3.65% APY its paying on a 36-month term, are attracting new members to the credit union. "People do shop around on that kind of thing, especially now."
Austin Telco FCU is about 43% loaned out, which is much lower than its historical average of 50%. If the credit union continues to see surges in loan demand and deposits, Poplin said the credit unions will take steps to put on the brakes. ATFCU showed $9.8 million in income during the third quarter; its capital ratio is at 10.5%.
Real estate prices have crashed across the country, especially in Florida, California and Nevada, but Texas has been largely immune to the crisis. However, automobile sales are just as stagnant in the Lone Star state as they are elsewhere and because Austin Telco FCU does not participate in indirect lending programs, ATFCUis relying on real estate lending for much of its growth.
"Rates are low so we are seeing more refinances and the Austin market has stayed pretty strong. It's really leveled off right now," he said of housing prices and sales. "But we haven't seen much of a drop. Certainly we've had a lot more favorable market than others. We have really low delinquency; almost beyond belief."
Poplin credits that low delinquency rate and few charge-offs to the hands-on approach the credit union takes to lending. While other larger CUs are relying more and more on instant decisioning technology and indirect lending to increase loan volume, Austin Telco FCU staffers look at each and every loan application
"We do not have computers saying it has a good score, let's do it no matter what," Poplin explained.
