BURBANK, Calif.-Partners FCU says that a sales and service culture, high cross-selling and pushing a three-year plan down through the organization helped propel it to success in 2012, and that those same strategies in 2013 will drive similar results.
John Janclaes, president and CEO at the 98,000-member, $1.15-billion PFCU, explained that part of its strategy is built around the fact that its average membership is 10 years younger than the national average, "and they have tiny little wallets, so we have to be very effective and very efficient in order to get overall strong results."
Because those young members need financing-but are also inexperienced borrowers-staff at Partners Credit Union go through a "lending university" covering how to write loans, along with weekly sales huddles and monthly lenders' meetings to discuss case studies and examine deals-both approved and rejected-to look at best practices.
Partners FCU ended 2012 at 6.1% loan growth, nearly two percentage points over its year-end target. Its loan-to-asset ratio was 85%, while the loan-to-share ratio was 95%. Membership grew by 6.7%, an increase from 2011, when membership grew by 5.4%.
Auto Lending's Role
Those strong numbers are why Partners was included in the most recent round of winners of the Crystal Performance Award from Raddon Financial Group. Crystal Awards are based on a scorecard of various factors such as growth, income, efficiency and margin management.
"The most important thing to us is that as we're serving members, we're managing the balance sheet," said Janclaes, noting that part of that strategy involves not putting any fixed-rate mortgages on the books. In place of that, the credit union puts an extra emphasis on auto lending, which Janclaes said was "absolutely" the biggest driver of growth last year.
Janclaes explained that staff are trained for cross-selling starting at the new accounts desk, and PFCU also regularly sends pre-approvals to members. In addition, it stages car sales and hosts car-buying workshops. That service not only includes explaining the difference between 0% financing and rebates, but info on pre-approvals, negotiation tactics, tips for visiting the dealership and more.
Moreover, Partners Federal also looks at the member's credit report during those sessions for cross-sell opportunities. Janclaes said that those sessions regularly sell out.
Members are holding on to their cars for longer these days, but Janclaes said Partners still sees a pretty even mix of new and used car sales. The CU also saw strong growth last year in indirect lending for both new and used autos. According to its December 2012 Call Report, Partners FCU has more than 25,000 auto loans on its books totaling more than $337 million. In addition to that, its indirect lending program made more than 10,000 loans last year for $156 million.
Picking Up The Phone
Partners FCU's expectations for 2013 are fairly similar to 2012, said Janclaes, based on a belief that the economy is in essentially the same place as it was last year.
"People talk about it getting better, and we agree, but it's not exponentially better. This is going to be a slow climb out. But what's not going to go away is people's needs for basic essentials-a line of credit to make purchases beyond what my paycheck is, they need a place to live, and they need a good car."
Janclaes said that Partners does not look to be a market leader on loan or deposit pricing, but does price for relationships, increasing returns to members who increase business at the credit union. That includes deals on fraud protection, ATM fee waivers, and boosting CD rates by 10 to 40 basis points.
Partners' net operating expense ratio hovered around 2.6% at yearend-about 40 basis points higher than its Q3 peer average-"but that's where we're paying a lot for service," said Janclaes. "You call, we pick up the phone. I say that facetiously, but it's important to invest in a service level that matches the appetite and expectation of the customer." During the recession PFCU doubled down on staff training and changed some of its staffing models (including bringing three groups of call centers under one umbrella) but still saw a net gain on all staff during the recession.
The service aspect is also crucial because of the CU's relationship with its primary FOM, employees of the Walt Disney Co., a brand that strives to be the gold standard for service. PFCU also occasionally runs synergy campaigns to tie in with the Disney brand, such as marketing tie-ins for the movie "Brave," released last summer.
Using Social Media
Not surprising for a young-member-focused CU, Partners is "pretty progressive" when it comes to social media, said Janclaes. But rather than use it as a marketing channel, "we see it as a way to talk about the brand and do a lot of listening, and talk to members about the things we're getting ready to do and what they think about it."
While many credit unions track just Facebook and Twitter, PFCU also closely monitors Yammer, Disney's internal social media channel, which helps it stay in tune with the membership.
Partners last year also released a new mobile banking app, tying in a new online banking platform, online bill pay and mobile RDC. Three months after launch, the number of members using online bill pay rose from 45,000 to 57,800 (58% of the membership), while active bill pay usage increased by 95% (from 8,500 to 16,600 members) and mobile banking usage grew 91% to 20,7000 users. More than 2,500 members use the CU's mobile RDC offering, and in the first 90 days of launching the app the CU saw $6 million in new deposits, and more than 14,000 deposits presented.
Janclaes credited extensive planning with helping drive the institution's success.
"Lots of times folks get a plan, but it's not really tailored to their field of membership," he said. "Your plan needs to be specific to your situation, and then work the heck out of that plan."
