MASSENA, N.Y.-SeaComm FCU transitioned to a sales culture internally nearly six years ago, and since then the focus has been not only making sure that the member leaves with the right mix of products and services, but an emphasis on cross selling and offering those things to the member.
SeaComm currently averages 2.36 services per household, has boosted non-interest income by 22%, and was recently recognized by Raddon Financial Group with a Crystal Performance Award for CUs with assets of $500 million or less. Crystal Awards are based on a scorecard of various factors such as growth, income, efficiency and margin management.
The credit union is keeping its expectations modest but achievable in 2013, pushing for 6% share growth, 2% loan growth and 3% membership growth. Those figures are based on expectations following 2012, when SeaComm grew its membership by 2.5% (it has averaged near 3% since 2007), and grew assets by just over 6%. CEO Scott Wilson said loan growth last year was "kind of flat ... but it was an accomplishment based on our portfolio size."
As of its December 2012 Call Report, SeaComm has $202.4 million in loans on the books, about 50% of which comes from mortgages and HELOCs. Credit cards and other unsecured loans, along with auto lending, also make up a significant portion of its portfolio.
No One Magic Sauce
There was no one product that led the way in 2012, said Wilson, but rather an even mix. That plays in with SeaComm's strategy of not emphasizing on any one particular product line. When it comes to auto lending, Wilson said he expects that the 0% trend at the dealership will continue for a while, so the CU makes a point of competing on service.
"The fact of the matter is that when you get that 0%, you pretty much have to walk on water," said Wilson, adding that a 750 credit score may be required-something many CU members don't have. "The reality is that credit unions want to lend to all credits. So we're still able to do that, even if you're a B or C (credit), you're still able to come and get a decent rate and get the vehicle you want, in addition to having that service experience with the credit union. Whether it's a weekly payment, which helps on interest, or a bi-weekly payment, when you compare apples to apples with a 0%, credit unions can still do better for the member."
Target Marketing
SeaComm relies on target marketing and word of mouth to get the word out on loans, and it also has indirect lending relationships with dealers in the area. But it's not totally indirect. "We won't let the dealer close loans," explained Wilson. "We get people into the credit union to close, and that gives us an opportunity to cross sell."
The credit union has in the past led with pricing, but has adjusted its pricing strategy down over time. To compensate, it offers loyalty reward programs, offering basis point increases and discounts on certificates and loan rates, respectively, for members that have been with SeaComm for one or more years, have a checking account with direct deposit, and at least one loan at the CU.
Boosting non-interest income streams has also been a focus at SeaComm, which has moved to an instant-issue program as a way to increase activation and usage of its debit card.
"We wanted members who opened a checking account with us to have it immediately, not just for their satisfaction, but also so they can go out and use it and start earning interchange for us," said Wilson. "We've seen an increase in interchange over time based on this platform, and it's setting off any potential decrease caused by Dodd-Frank."
SeaComm made $5.4 million in non-interest income during 2012, a $1-million increase from 2011. Between 2010 and 2011, NII only grew by $100,000, rising from $4.3 million to $4.4 million.
Wilson said the CU consistently sets a goal of a 2.95% net operating expense, and all staff are incented on a quarterly basis if that number dips. He did not share specifics on incentives.
Wilson also noted that expense control doesn't just have to be about big-ticket items or vendor contracts."There are two types of file folders: you can buy a color-coded file folder or a plain manila folder. It's less costly and it does the job. That's been very, very successful for us over the last few years."
Just like other CUs, SeaComm has had to deal with increased deposits in recent years, and Wilson said that it has had to become more sophisticated in its investment strategy as a result. One tactic it has taken is moving to investments like GSEs and even taxable municipal bonds, which he said have helped it earn vital yield in a low-rate environment. Last year's portfolio yielded just over 3%-a contrast to overnights, he said, where "you're earning basically nothing."
"Having excess cash in overnights at the Fed doesn't earn you much," he said. "You can have excess cash in your vault."
A well-diversified portfolio has also helped shield the CU from significant interest rate risk, said Wilson, but other features, such as call features on bonds, "make sure that as interest rates rise we're protecting ourselves as we move forward."
Figuring Out The Future
SeaComm has invested in mobile banking, RDC, intelligent deposit machines and more. The credit union is also investigating how it will get involved in the mobile wallet space, but Wilson said he believes that larger shifts in consumer behaviors are on the way-and those changes may be harder to prepare for than just investing in new technologies.
"Although we have no problems getting deposits today and we're struggling with loans, I think it will be the opposite in 10 years," he said. "The generation coming up today doesn't save; they spend what they earn and they want things now. We have to be cognizant of that-that there is going to be a change in demand and what people are looking for, and you have to set your strategy based on that."
