COLORADO SPRINGS, Colo. — When it comes to credit union growth this year, the good news is that there are plenty of prospects. The bad news is that there's not much low-hanging fruit.
"Quite honestly, I don't think there's any fantastic opportunities that are going to present themselves," said Bill Vogeney, chair of the CUNA Lending Council and senior vice president and chief lending officer at Ent FCU here. "It's going to be another year of plodding along and a lot of hard work for credit unions to find the growth. I don't think there's anything easy out there."
The best bet for credit unions, said Vogeney, may be found on the home equity front.
"Home values are back to 2007 levels, and people have equity again, they see homes being sold in their neighborhood," he said. "I think people are going to be interested in taking home equity loans for home improvements again."
Vogeney noted that while certain areas of the country are still suffering, many troubled regions — such as Las Vegas and Phoenix — have rebounded "reasonably well." Add that to a few years of pent-up demand, and "people aren't going to re-fi at higher rates to take cash out; they're going to do home equity."
The broad consensus among many industry insiders and experts who spoke to Credit Union Journal for this report is that the days of basing the bottom line around mortgages and home refinancing are coming to an end.
But that doesn't mean there aren't plenty of other ways for credit unions to grow, they said.
Mobile Still Major Player
Robert Reh, chief information officer at Nassau Financial CU and a member of the CUNA Technology Council executive committee, observed that expanding use of mobile and mobile technologies will be the biggest growth area for credit unions in 2014.
"Technology is providing new avenues to gain loans, as well as provide services in lending to members and potential members," he said.
Lending via mobile devices is slowly gaining steam, fueled in part by CUNA Mutual Group's LoanLiner.com, which in August hit the $1-billion mark, and its AskAuto app, which connects members to their credit unions while they are looking at cars at the dealer lot.
Since LoanLiner.com's mobile-optimized loan application was launched in July 2011, the percentage of applications originating from a mobile device has increased from 4.7% to nearly 19% today, according to Rick Uhlmann, senior manager for media relations at CUNA Mutual Group.
While most of those transactions continue to come from smartphones, "we do see a healthy volume from tablets as well," according to Uhlmann.
Reh said he believes that social media "really hasn't taken off to a great extent in our industry to what I can see, but there are a number of credit unions that have been very successful in gaining membership and loans and deposits" via social media.
Social Media Successes
He pointed specifically to West Jordan, Utah's Mountain America CU, Navy FCU and Tukwila, Wash.-based BECU as examples of CUs that have successfully harnessed social media.
But many CUs — in particular small- and medium-sized institutions — continue to struggle in that realm, and many analysts continue to be skeptical that CUs can find real ROI in social media.
At Partner Colorado CU, CEO Sundie Seefried said that her credit union is expecting to see increased interest in auto loans, a continuation of a trend that began in 2013, when the $250 million Arvada, Colo.-based credit union financed $135 million in car loans.
'Still A Good Pursuit'
"Auto loans are still a good pursuit, because they are short term, the market is still strong with pent up demand, and they are still earning better than investments if priced right," she said in an e-mail to Credit Union Journal. "Dealer relationships and the right people on the job really make the difference in producing a solid, steady stream of auto financing."
Seefried added that business lending can be a good source for loan growth, with banks continuing to shy away from small businesses, but she noted that CUs must be able to "afford the talent to originate solid business loans and manage the portfolio; otherwise, participation programs allow for a credit union to diversify their loan portfolio."
Kathryn Davis, SVP at Xceed Financial CU and vice chair of the CUNA Marketing and Business Development Council, noted that advances in the payments space can provide a vital opportunity for credit unions to grab younger members who are looking for the latest and greatest tech solutions.
Old stand-bys still offer big opportunities, however, and Davis noted that the auto market continues to be a place where CUs can differentiate themselves. With cars staying on the road for longer than ever, she predicted that 2014 may finally see the new purchase market pick upboth because of improving consumer confidence and because their current vehicles are aging.
"I also think there's a lot of business to be had in terms of auto refis," she said. "We're seeing some fun stuff here at our credit union where if you've got an auto loan someplace else, bring it to us and we'll improve your payment. If you've got a paid-off car, bring it to us and we'll improve your finances."
Xceed plans to roll out a promotion in early 2014 encouraging members to refinance cars with that are fully or mostly paid-off to take advantage of low rates to pay off other debt or improve cash flow.
