EULESS, Tex.-When it comes to managing expenses, credit unions need to answer one important question: "Are you overstaffed or grossly overstaffed?"
Brett Christensen will ask that question at the upcoming Grow Show, April 27-29, in San Diego during his session on "Growing Net Income in a Difficult Environment." The national CU consultant believes many in attendance may not want to hear the question, "but they may benefit from answering it and addressing it," he said.
Christensen, who heads up CU Lending Advice here, plans to share strategies around how to grow revenue and cut expenses, one of which will be how to get the same amount of loans out of one-third of the current staff. It's a strategy he devised while heading the lending and sales department at a Las Vegas credit union.
Expense Control
"As you can imagine the credit union today faces tremendous market stresses, but they are still profitable because they have their expenses under control," said Christensen. "I'll share examples of what departments tend to get overstaffed and what areas credit unions can't skimp on."
When times get tough you have to look at expense ratio, insisted Christensen. "Many credit unions have built too many branches and hired too many bodies. And that might have worked just fine when economic times were good. It's not going to work this year."
For most, Christensen does not recommend reducing staff, but instead freezing hiring and learning how to run the business more efficiently. "In two or three years you'll still be growing, but have the same number of bodies. Most need to figure out a more efficient business model, and I will share a model that works."
To grow revenue, Christensen is not a fan of courtesy pay fees, which the consultant termed "'evil.' They have been attached to debit cards. You just prey on people who can't balance a checkbook. There are certainly opportunities for fee income that are not courtesy pay. You can also grow revenue by appropriately taking more risk in lending, which I will address."
Through CU Lending Advice, Christensen provides consulting and training services to credit unions nationally. Christensen began his credit union career as VP of lending and sales at Clark County Credit Union in Las Vegas, and later worked with credit union lending guru Rex Johnson, before opening his own business in Texas.
The Bad Loan 'Autopsy'
"I have been working in lending and sales for the last 17 years," Christensen said. "I'm the guy that gets hired when all the loans start going bad, and I do the autopsy. Trust me when I tell you there is room for improvement when it comes to underwriting... Part of that is generating more loans, but it's loans at the correct rate. I'll talk about being able to grow loans in a different environment. Some of the steps credit unions will need to take are sales culture related, some are policy related. I'll touch on both."
For info: www.culendingadvice.com.
