Worth the Risk

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LIVE OAK, Texas — There's risk-based pricing, and then there's the risk-based relationship pricing model practiced by Randolph-Brooks FCU.

Mark Sekula, SVP of lending for the $4.1-billion credit union based in the outskirts of greater San Antonio, said RBFCU counts and tracks all relationships its members have with it. The more relationships they have, the better the rate they get on loans.

"With that loyalty factor, members see the reward at the rate level," he said. "Members also get discounts on products to protect a vehicle, including GAP insurance and warranty products."

Randolph-Brooks FCU was identified by CUDATA.com as one of the Top 10 credit union lenders by dollar growth in 2010. Sekula said its lending strategy is a combination of strategies.

"Being in San Antonio we compete against two of the largest and best indirect programs in the country in Security Service Federal Credit Union and San Antonio Credit Union. We make sure we give the best service we can. Some people say service is just a commodity but I think it is much more than that."

Sonya McDonald, VP of sales and marketing for RBFCU, said it has a reputation in its local area of offering the best rates.

"A few years ago we were the first to drop our auto loan rate and we blasted it all over town on billboards," she recalled. "It took our competitors a month or two to catch up."

RBFCU saw 20% growth in mortgages last year. Sekula said on the commercial side it also had 20% growth, but pointed out its commercial portfolio is only $150-million, whereas its mortgage portfolio just broke $1-billion in first lien mortgages in February 2011. "We are the largest credit union mortgage lender in three counties, and we have our own title company," he said.

Randolph-Brooks had 19% growth on its credit card portfolio, much of which Sekula said could be attributed to relationship pricing. Its credit card portfolio was $188-million as of Dec. 31. In 2010, RBFCU's delinquencies were 0.41%; charge-offs 0.24%.

RBFCU reported net income of $62.2 million for 2010, excluding $4.9 million to the NCUSIF and $10.1 million to the corporate stabilization fund, leaving it with net income of $47.1-million. Its net worth ratio was 11.49%.

Slowing Seen In 2011

Randolph-Brooks did not make major changes to its lending policies or underwriting criteria in 2010, other than to be "a little more careful" in reviewing commercial loans because those are larger loans, Sekula said.

Through two months, lending in 2011 has slowed down. Sekula said RBFCU is still approving auto loans, but added its members are holding off on purchases in part due to rising gas prices.

"Instead of $25,000 vehicles, people are looking at $17,000 vehicles. Our members are only buying if they absolutely have to. What this means is our marketing is very important. We have to stay in front of members because we never know when that purchase is going to take place."

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