WICHITA, Kan.-With $26 million in assets and fewer than 5,000 members, Catholic Family FCU is right in the sweet spot for the "Great Divide" between CUs that are profitable and those that are struggling-and CEO Michael Taylor is well aware of it.
"Our situation is not unlike a lot of other credit unions: we need to grow in loans," he said. Taylor, who took the helm at CFFCU in January, said that part of his strategy lies around reintroducing the CU to Catholic churches and their parishioners. His goal is to increase lending from about $17 million currently to $24 million by 2015-to be driven largely by second mortgages and auto lending-while growing membership from about 4,300 to 6,000 in that same time frame.
Catholic Family has also cut rates on its deposits, but Taylor said the CU is not yet turning away members.
"People that know credit unions trust them, and that's where they put their money," he said. "Once the market starts going up, we'll see some run-off...We can't drop the rates lower, so to combat that we've trained employees to ask questions and see what else the member needs, and see if we can get some more services from the members that will help them and help the credit union."
To spur lending, CFFCU has also tinkered with some of its lending criteria, said Taylor. While pricing, fee structures and credit tiers have not changed, Taylor said Catholic Family has eliminated a previous policy that all members with a loan at the CU must keep $100 on hold in an account until the loan is paid. "I don't know what the reasoning behind that was, but we've done away with that," he said.
Catholic Family is continually looking for places it can further reduce expenses, while on the other side of the ledger and in recent months it has also bought some participation loans and beefed up indirect lending. But Taylor stressed that he is wary of relying too much on indirect lending to grow the business, because "basically you win at indirect by volume, and once your volume starts to slow down, you really have to monitor it, because your charge-offs can overcome your volume. So we monitor it on a daily basis."
CFCU turned a profit of $60,000 in 2009, but has lost money in each of the last three years, starting with $137,000 in 2010, $175,000 in 2011 and $258,000 in 2012. Loan volumes have also dropped by about 15% since that time, from $18 million in 2009 to $15.5 million last year-an increase of about $800,000 over 2011.
Opposed To Merging
But there are signs that things may be improving. Taylor pointed out that since he arrived in January the CU has grown loans by $1 million, while assets have grown by about $2 million in that time.
Merging with a larger credit union has saved some small CUs on the wrong side of the Great Divide, but Taylor said he and the board remain opposed to that.
"I wouldn't entertain it unless the situation was so that it would benefit the members," he said. "I can't speak totally for the board, but I pretty well know their stance that we wouldn't even entertain that unless it got to a situation where we thought it was going to benefit the members more than what we can offer them."
But CFFCU is also not in a position where expansion is an option, said Taylor, pointing out that in addition to its headquarters in west Wichita, it also has a branch in northeast Wichita that it shares with Mid American and Cessna Employees CUs. One of Taylor's ambitions is to eventually begin putting small branches in area Catholic churches, but he said that will likely not happen for another two or three years.
Taylor predicted a similar timeline for when CFFCU might finally be able to roll out a mobile offering. "We're just not big enough at this time to offer that service, but I hope to in the future," he said.
