WEST JORDAN, Utah -
In 2006, the now $2.1-billion credit union recorded the second highest return on assets for the 116 credit unions in the $1-billion-plus group-with its 1.70% bottom line performance, improved from 1.51% during 2005.
With a 2006 asset growth rate of 21% supported with 8.3% capital, the Mountain America team has sought to do a great job from every angle-net interest margin management, pricing, member growth and number of relationships maintained, strong loan origination volumes, capital management and Internet banking penetration.
In addition to traditional credit union products, Mountain America's menu includes comprehensive business banking products and services, mortgage banking as well as a sizeable indirect lending business. During 2006 the credit union's net interest margin to average assets decreased only three basis points over the prior year, while the net operating expense to average asset ratio improved by 28 basis points generating the bottom line improvement for the year.
Efficiencies gained during 2006 include increasing the number of members using their secure e-statement program from 50,000 to more than 75,000, contributing to more than $600,000 in postage savings alone. Additionally, the number of members opting to use Internet banking improved nearly 19% year over year and Mountain America's informative and intuitive website makes it easy for members and prospects to interact with the credit union and conduct self-help research.
Hiring & Training Practices Are Key
Dames credits a large portion of Mountain America's success to MACU's employee hiring and training practices with significant time and resources invested in developing the right structure. Training is the foundation - the philosophy is to hire the best personality fit for the job and focus on training for the required skills. This approach provides Mountain America with a successful "hierarchy for decision making" - enabling the credit union to drive the decisions directly to the member interaction level through every employee, Dames told Credit Union Journal.
The wisdom of this approach is proven out with results during 2006 more than 25,000 new members were added, more than $1.4 billion in loans were granted, and by the end of the year every member averaged nearly three loan and deposit products. A strong relationship balance program effectively bundles products and services together tying discounts to balances maintained. Unlike many credit unions, MACU has declined to sell its credit card and mortgage servicing rights. Approximately 25% of Mountain America's members have a credit card (average outstanding balance is $1,650), and the credit union has also built a successful mortgage servicing portfolio with a 35-person team, retaining servicing on most originated mortgage loans sold.
By the end of 2006 more than 10,000 small businesses were banking with Mountain America, up 3,000 from 2005. With over $250-million in business deposits and $120 million in loans, Dames estimates MACU's business banking program is contributing between 15 and 20 basis points to bottom line results. As the No. 1 credit union SBA lender in the U.S., the Mountain America Member Business Lending, LLC CUSO supports more their 20 CUs with their business banking endeavors.
Mountain America's indirect lending program is also a successful contributor. MACU closed 2006 with more than $360 million in outstanding balances and it underwrites an average of 1,000 car loans per month using a risk based lending pricing approach to insure credit quality. As reported in the Credit Union Journal April 30, numerous CUs have tried almost as many strategies to convert members gained through indirect loans into full-fledged members. Mountain America is among them, and it has experienced some successes. MACU has a member calling program that makes sure new members gained through the dealer channel do not become a lost member statistic working with them individually to enhance the member relationship.
It is obvious that Dames and his team have gotten the success formula right-they were recently chosen as one of the best large companies to work for in Utah for the third time in a row. By focusing on better training to prevent problems in the first place, not a lot of time is wasted putting out fires. When mistakes are made, the focus is on the lessons learned and training to prevent a recurrence.
Mountain America's 2006 results were no anomaly. The credit union is out of the gate fast in 2007 with new service and product introductions and on the way to a 55-branch goal. Progressive new program introductions include a remote business deposit service and a Health Savings Account offering they expect to leverage through their small business relationships.
Mountain America CU By The Numbers
2006 2005
ROA 1.70% 1.51%
Capital to Assets 8.27% 8.14%
Total Assets $2.06B $1.70B
Total Asset Growth 21.2% 19.2%
Members 236,565 211,269
Net Interest Margin/Average Assets 3.52% 3.55%
Net Operating Expense/Average Assets 2.81% 3.09%
FTE Employees 676 577
Average Assets per FTE $3.0MM $2.9MM
Average Assets per Branch $45.8MM $40.5MM
Loan Grant % of Interest Earning Assets 82.1% 80.8%
Internet Banking Members % of Total 42.8% 40.6%
Average # Accounts per Member 2.97 2.95
Source: Dec. 31, 2006 NCUA Data
