CORONADO, Calif. — How does HAPO Community CU spell success? L-E-N-D-I-N-G.
"Years ago we determined that the best earnings strategy is lending," said David Schulz, CEO of HAPO Community CU, Richland, Wash. "It's why we're here. We are all about the loan. It's our best destiny."
Schulz was joined by HAPO COO Steve Anderson and Momentum VP-Client Services Greg Barrett during a panel session at CU Journal's Grow Show.
One of the keys to continuing to grow despite the troubled economy is staying true to whatever your original course of action was, Anderson observed. "Unless there is a catastrophic meltdown, which is unlikely, then our vision is still good," he said. "But we frequently find ourselves swimming in the other direction. We were reluctant to come here and speak, because we know there's the risk of being tarred and feathered because our thinking doesn't follow the mainstream."
But staying true to your vision shouldn't be about something ethereal or esoteric, Schulz stressed. "Most of us have formed a mission statement or core values, but you have to drill down to strategic values, to something less abstract," he said. "Establish who we are and how we do business. We are on a growth path, and it's just felt, it's said, it's voted on. And if we're going to grow, earnings must be sufficient for the capital requirement. When you have rapid growth, as we have had, there is a very small margin for error, so you have to manage it right and plan growth quickly."
And the best way to bolster real earnings, Schulz offered, is lending. "We are all about the loan and having a great loan department and a strong collections department," he related. "There is no fee guilt in our organization. I know fees are a political thing in credit union land, but their should be no guilt about charging a healthy, appropriate fee."
One of the great detractors of growth among credit unions, he posited, is a continued focus on deposits. "I grew up in credit union land, and historically it was all about how to get that deposit, how to get you to deposit that $5 share and get you to join," Schulz observed. "There has to be a shift to focusing on getting the loan."
To that end, all of HAPO's "financial service specialists" are cross-trained to sell all products, and all are on an incentive plan.
But HAPO doesn't just rely on its own people to sell loans. "The bulk of our car loans come through auto dealers, and the bulk of our real estate loans come through the real estate community," he explained. "We re-injected the word 'customer' into our language, because customers have a choice. A few years ago, I was at the GAC, and there was a speaker who talked about how his credit union got out of indirect lending because indirect members only get a car loan, and because they don't get any other products, they're not 'real' members. I say, if they only have but one product, and it's a profitable loan and they're it off, they are every bit a member."
The key to indirect lending-and, indeed, to growth in general-Schulz and Anderson maintain, is convenience. "Members, customers, they are not about value, they're about convenience-they must be, or else they'd all be credit union members," Schulz suggested.
That's why HAPO has stayed true to indirect lending-and branching.
"We're not afraid to be a pioneer," Anderson said. "We're like Wal-Mart. We don't go where everybody else already is. Wal-Mart doesn't go where everyone else is in town, they go where no one else and bring the town to them."
Likewise, HAPO doesn't build its branches where it already has a strong membership base-it goes to new markets. "We look at where we need to be to acquire new members, Schulz commented.
And though HAPO is "all about the loan," its branches are all about deposits, relying on its other delivery channels to drive loans, leaving the branches to help build deposits to fuel all that lending activity.
"We are not transfixed on being the PFI [primary financial institution]," Schulz said. "We believe it's important to build the member relationship and have a total account relationship, but not to the exclusion of the singular loan."
