PAYSON, Utah - Dennis Dunn, CEO of Mountain High FCU, knows all too well the challenge faced by smaller credit unions in doing more with less.
That's why Mountain High-which reported $356,198 in net income through June-has put emphasis on making more money per member and maximizing staff efficiency. The approach has been working for the $57-million credit union, whose assets have grown by an average of $12 million over the last three calendar years. But it's a strategy that's being tested in today's economy.
"I'm not sure that we do get by right now," said Dunn about a local economy that's nearly halted lending and raised competition for deposits to a point that's making it difficult to have adequate liquidity if the mortgage market picks up here.
But Dunn plans to stick to his approach to maximize revenue per member, and much of that revolves around a Premier Checking account that bundles a host of CU services and is given to members when they sign on. The free Premiere Checking comes with a Visa credit card and a debit card, overdraft protection with a line of credit, and direct deposit. If the member has kids, children are immediately eligible for a certificate paying a10% APY that can be opened for $50-but deposits can't be touched until the child reaches 18.
Members have the option to turn down Premiere Checking, which pays .25% APY, in favor of a standard checking account that carries a $10 monthly fee. But Dunn said, "Nobody wants that. They always take the free account and we know that. We just bundle everything up and they get the whole shooting match."
Not 'Shy' About Fees
Dunn explained that the CU is also not "shy" about fees. "We charge fees," he said. "Our returned check and late charge fees are among the highest in the nation and I say that without any embarrassment. Some people say, 'Wow. You are like the banks.' Yeah, I am, and I readily admit it. But no one has to pay that fee. Don't write the bad check ($30 to $40 fee) or pay late ($25 fee or 5% of the payment, not to exceed $99). That's an elective fee. On those kinds of fees we charge pretty high."
Loan rates are also high to help maintain a profitable spread over CD rates that compete with the best deposit rates in the state, according to Dunn. Currently a Mountain High 18-month certificate paid 3.65%.
New car loan rates, which Dunn estimated are the highest in the state, ran 6.50% to 6.75% for 60 months at press time. "That's our platinum rate," Dunn said. "For D and E paper we charge as high as 17% to 18%."
Mortgage loans, all of which the CU sells to the secondary market, charged 6.78% for 30 years fixed at press time. Due to the economy and a choice to slow down-"we were getting a little ahead of ourselves," Dunn said-the CU plans to keep growth level this year. "Lending has come to a halt. We made two first mortgage loans in the last quarter and we used to make between nine-12 per month. We can't find anyone who qualifies."
A Small CU's Greatest Disadvantage
Mountain High recently laid off 25% of its staff due to the economy, a decision that further exacerbates a small CU's greatest disadvantage-human resources, Dunn said.
"Each of us in the credit union wears a lot of hats," Dunn said. "I'm also an HR guy. I didn't sign on for that. But someone has to do it. We struggle to find adequate human resources and the larger credit unions do not."
To get the most of the team he has, Dunn employs a "TLCS" approach to staffing, for tellering, lending, collecting, and sales. "Everybody in our credit union does everything. Every employee handles loans, collections, and sales."
The highly incentive-based TLCS has allowed Mountain High to grow, and adjust to the recent staff reduction, helping employees quickly pick up new areas of concentration.
Despite the economic times, the CU's plan to do more with less and get more per member will allow Mountain High to keep pace with, if not surpass, the larger financials, Dunn contends. "To be big you have to play big. We want to be a big credit union some day. So we model what we do after the big guys. If monitor them to see what they are doing, and if it's successful, we'll do it-maybe even better." Dunn said that means offering a full range of products. "You know the saying 'You can't be all things to all people,' but I sure can try. For example, I say we'll tailor that loan to meet your needs. If not in the conventional way, we'll find an unconventional way to get the deal done as long as the member qualifies. If someone calls and says a banks is offering a CD special, we'll match it if makes sense."
