DECATUR, Ill. - Sometimes keeping it simple can pay huge dividends.
Just ask ADM CU: the $12-million CU took top honors in its asset size in Callahan & Associates' Return of the Borrowers survey that is part of the Washington consultancy's Return of the Member rankings.
ADM Credit Union has steered completely clear of the mortgage mess and restricting the loans it hands out on vehicles as well.
Members in good standing can get a new car loan for as little as 4%, but don't expect this single sponsor credit union to allow such flexible terms that members and the credit union can get into trouble.
"The rates that they set were set before I got there, and I haven't seen any reason to change them," said CEO and president Don Tewell. "One of the things we do is we don't go over 60 months. If it takes you six years or seven years to buy a new car, you should probably buy something cheaper."
Such rigidity may be a recipe for disaster elsewhere, but ADM CU is extremely well capitalized at over 25%.
In fact, the credit union has so much money in reserve, it is looking for ways to give a rebate back to those with a loan out along with the usual dividend.
"We've been giving back to our savers, so now we want to give back to our borrowers," said Tewell.
The credit union does have the luxury of a small field of membership as only ADM (Archer Daniels Midland Company) employees, their spouses and children still living in the home of an employee can be a member. Nevertheless, ADM Credit Union does not get a subsidy from the agriculture processing company and still has to keep up with the competition.
Tewell recently pondered allowing home equity lines of credit, but rejected the idea noting that while ADM CU has only one branch, its membership extends even beyond the borders of the United States.
"We're based in central Illinois, but we have members nationwide. I am not big enough to be able to close a second mortgage loan in Louisiana; I just can't physically do it," Tewell said. "Why should I offer a HELOC to some guy down the street if I can't offer it to someone in Charlotte, N.C. If I can't offer a loan product to everybody then it's not for us."
Though conservative by many estimates, Tewell is also fairly flexible. ADM Credit Union keeps its signature loans in the $5,000 to $6,000 range and does not work much with members with a credit score less than 500.
Still, the credit union bears in mind the amount of time a member has been there and how long he has worked for the SEG.
Members who have kept their word at repaying the credit union even after bankruptcy or finding themselves in another sticky financial situation are given the benefit of the doubt, Tewell pointed out, saying that a member with a credit score in the mid 500s can still find a way to earn both a solid car loan and an unsecured loan.
"He took care of us, and we take care of him. If anything goes wrong he's going to pay us back."
Aside from the greater volume of used car loans as opposed to new car loans, the credit crunch and economic slowdown have not hurt the bottom line at all.
"Maybe I'm just lucky, knock on wood. We really haven't seen a big downturn because of the economy," said Tewell, who credited ADM Company's solid wages and lack of layoffs to the credit union's continued strength.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
