No Exemption From Economy — Or The Exemption

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At the League of Southern Credit Unions' annual meeting a few weeks back, Steve Ravin, CFO at Tyndall FCU in Panama City, Fla., said it's imperative every credit union identify and understand its core business. In the case of Tyndall Federal, Ravin said, it's "making loans, and that's our driving force."

Tyndall FCU's success and growth (it just surpassed $1 billion in assets) attest to the value of identifying a credit union's reason for being, something that, as simple as it sounds that many credit unions fail to do. (If someone were to ask all of your employees, "What is your credit union's core business?," how many responses do you think they'd get? As many responses as number of employees?"

Yet even if your CU has similarly ID'd lending as its "driving force," you may also find yourself responding, "Hey, the force is not with us." In some markets consumers seem to be borrowing, in others, it's Suddenly Savers. Consumer sentiment over whether an economic recovery is underway is mixed. Consumer spending was up 0.2% in April, and personal income also increased 0.4%. At any other time that would seem to bode well for credit unions looking to lend.

Then again, as this story details, mortgage rates are for once actually living up to the promise of "historic lows;" in this case the average rate on the 30-year is at its lowest point since the government started tracking the average in the early 1970s. The front page of this newspaper should be headlined by coverage of long lines of consumers looking to purchase homes and refinance their current mortgages. Instead, thanks to the gluttony of the past several years on the part of both many lenders and borrowers, the pipeline is mostly air.

Will the lending picture brighten anytime soon? It's tough to measure the mood of America right now, and it's an election year with Congress in the balance. Negative economic numbers typically help the party out of power-look for the GOP to keep stressing the red numbers, and for the Dems to keep stressing the black-although to the individual voter his or her own bottom line.

In this issue Credit Union Journal focuses on some lending strategies that have worked for credit unions. Our goal, as always, is to play a role in helping every credit union grow its operations. May the force be with you.

• CUs might want to glean a few of the insights of Tony Hsieh, 35, the founder of Zappos.dom. If you're unfamiliar with, it's one of those online retailers that are doing big business after a relatively short time. In its case, it posted sales of $1.2 billion in 2009, just a decade after it was founded.

In his book, titled "Delivering Happiness: A Path to Profits, Passion and Purpose," Hsieh preaches and preaches again the value of service. A reviewer in the Wall Street Journal noted, "He talks of 'core values,' like showing 'passion and positivity.' But he is most persuasive when he returns to the matter of customer service. Many companies hide their contact information, he notes, afraid they might have to deal with a real customer. Zappos tries to see service not as a cost but as a powerful marketing tool. Surely he is on to something: as customers communicate with one another more and more through social media, the chances to make an asset out of customer service will only grow-as will the costs of getting service wrong."

As someone who has spent a fair amount of time looking at credit union web pages for a phone number or even an address, and then struggling to find either, the growth and success of should make clear that it's not "Not For Profit, Not For Charity...Not Able To Be Reached."

Inside Zappos, incidentally, there has been an effort to make the corporate culture more communal. Employees who log in with a password, for instance, are prompted with a picture of another employee and are asked to guess who that person is. This would not just be a valuable idea for professional staff at credit unions with a large number of employees; it should be mandatory for members of the board-especially if they are given a CU-issued laptop.

• Talk about taking your chances with potentially hostile audience. Among those speaking to the recent National Federation of CDCU's 36th annual conference in Pittsburgh was the executive director of New York City-based Fair Mortgage Collaborative. The exec director's name: Howard Banker.

• As noted above, Tyndall FCU recently shared some of that CU's strategies for growth. In addition to CFO Steve Ravin, TFCU CEO Jim Warren also spoke to the meeting, explaining its model is based on three legs. "First, build the right team," said Warren. "Second, improve expense ratios. It's not our money. Our average member makes $18,000 a year. Every time we spend a nickel of it, we need to know where it's going. And third, we must improve loan quality and loan losses. We sell loans. These are not gifts."

On the first issue, Warren offered a thought that runs counter to what some CUs preach. "This is not family. It's hard and it takes time," Warren explained. "This is a team. They have to bring something to the table, they have to deliver it, and we have to give it back to our members. And if they don't they can't stay. And in my opinion that's where so many teams fail. What's just as important as who is in this picture, is who is not in this picture. And that's the hard part."

Ravin added, "We've taken the approach we're not going to use the tax exemption to subsidize operating inefficiencies. We want the members to get the full benefit of the tax exemption we have."

Frank J. Diekmann is publisher of Credit Union Journal and can be reached at

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