SLEEPY EYE, Minn.-Investment in product training is paying dividends at SouthPoint FCU here, which is approaching an average of four products per member.
"We try to use the KISS theory," said CEO Richard Nesvold. "Keep It Simple, Stupid."
That simplicity has not just boosted net income, it has earned the credit union a Crystal Performance Award from Raddon Financial Group for credit unions with assets of less than $500 million. Those awards are based on performance in growth, income, efficiency and margin management.
SouthPoint FCU has set a goal of four product relationships per member, and it couldn't be closer. "As we speak today, we're at 3.98," said Nesvold.
"We spend a considerable amount of staff hours, as well as resources, in doing product training for our staff-both frontline and behind the scenes-so that they have a good understanding of what the products are," said Nesvold. "We concentrate on the benefits to the member, not just the features. In that training process, we say we need to do more listening than we do talking, and listen for the cues of what the members' needs and wants are going to be, and recognize how our product can fill those needs."
In terms of compensation, SouthPoint FCU uses a "modified pay-for-performance plan. We evaluate employees based on their results-if they're walking the walk and not just talking the talk. It's paramount in a cooperative environment that we're providing for what the members' needs are, and that builds confidence and trust in the relationship, and eventually they're comfortable and have confidence in coming back to us with additional needs or wants that they may have throughout their life."
Challenges in Rural Market
The CEO explained that SouthPoint's forte historically has been in residential real estate lending, and because its market is more rural, home valuations haven't fluctuated or declined as they have in many other markets. As a result, SouthPoint FCU continues to book strong refi business and portfolios loans on three- and five-year balloons. Loan growth has largely remained steady for the last few years, and is "pushing about 12% (in 2011) on loan growth."
SFCU, which uses risk-based pricing, had just over 1,900 real estate loans and leases on its books, totaling about $125 million, according to its most recent call report.
One challenge for SFCU is the population of the three counties in its market has decreased by as much as 5% since the last census, on top of an aging member base. Competition, he said, comes from community banks, "and a lot of them walk and talk like credit unions do."
As such, the credit union relies on word-of-mouth advertising from members, rather than significant marketing campaigns. There is also value in old-fashioned shoe leather. "It's important to knock on doors through the Realtors and get the message out there," along with the credit union's name.
For CUs hoping to emulate SouthPoint's success, Nesvold reminded it's not a matter of simply duplicating the business plan. "Everybody's got to pick their own path to walk down," he said. "You just need to engage your staff into minimizing the first two and taking advantage of the latter one."
