Posted by Mr. Dean Borland, SCMS, CUDE, VP Product Development, Credit Union Resources, Inc on 12/22/2017

Given that it is late December I will hazard to guess that most credit unions have inked a strategic plan and if the 2018 operating plan and budget is not already approved it likely will be very soon. I will even go out on a limb and project that many, if not most, in Credit Union Land have aspirations for revenue growth in 2018.

Callahan & Associates’ Peer-to-Peer software provides some insights into the credit union revenue dynamic. On average, loans constituted 70% of credit union assets and directly contributed 63% of total income generated by credit unions in Arkansas, Oklahoma, and Texas in the third quarter of 2017. “Other” operating income, which is frequently derived from loan-related activities, accounted for 12.8% of income. Adding the two together one might say that lending directly or indirectly contributes over 70% of credit union income.

Rounding out the categories, fees are the second largest single source of income at 17.2% of the regional total. Investments, which constitute 17% of credit union assets, generate 7% of total income.

Depending upon your credit union’s loans-to-assets ratio your income composition may not look like the averages, which are admittedly influenced heavily by large credit unions. And credit union profitability is generally higher among credit unions with healthy loans-to-asset positions. So, if you are looking for revenue enhancement and your loan mix is not where it needs to be, a likely candidate for revenue enhancement may be loan growth.

I have been privy to many strategic discussions about loan growth, many of which gravitated toward new membership growth. But, the truth is, you don’t necessarily have to enroll new members to grow loans.

Ask yourself. How many of my credit union members drive a car? How many cars on the road are under a lien? How many of my member households have their car loan with my credit union?

If you are in AR, OK, or TX it is likely that almost all of your members have an automobile. As recently as May 2017, the Federal Reserve Bank of New York reported that a record 107 million Americans have a car loan. That’s about 43% of the entire U.S. population. Consumer Reports estimates that over 84% of vehicle purchases involved financing, either a loan or a lease. That begs the question, how many of your members financed their vehicle with your credit union?

Obviously we can’t publish the auto loan penetration rates for every credit union in Arkansas, Oklahoma and Texas in this short blog, but I can tell you that the average auto loan penetration rate for credit unions within this three-state region as of September 30, 2017 was 25.15%. In the spirit of full disclosure it’s only fair that I tell you that this number has grown dramatically over the past 4 years. Our auto loan penetration rate was 20.28% in at the end of the third quarter of 2013. Even so, how many of your members drive a vehicle to the credit union? How many of those vehicles have a lien? How many of those liens are to your credit union? Just saying…

New member growth is both desirable and necessary, but the point of this little trip down the rabbit hole is that new members are not the only source for lending enhancement. Opportunity for lending enhancement exists within your current membership.

So, how do you capture incremental loans from your existing (and new) members? Start with an analysis of your value proposition.

Not all of your members have stellar credit. Be sure that your loan policies and practices are inclusive of and appeal to most, if not all, of your member segments. The rates you charge are very important to your “A” paper borrowers but for borrowers with lower credit scores getting a loan with affordable payments is probably more important than the interest rate. Price to the risk.

Not all buyers are able to make a 10% or 20% down payment. “Full boat” financing is increasingly common. If you are going to be in the game you may have to concede to lower or no down payment. Price to the risk.

And, you are going to have to find those potential borrowers when they are considering making taking out a loan. You have to be in the consideration when your member is buying a vehicle, but there may also be opportunities to recapture a loan after the initial financing. If you already have the tools and wherewithal to deliver the right appeal at the right time to the right members none of this is news to you. If you don’t have the tools or competencies to do it yourself you will need some help.

Ser Technology (, a Credit Union Resources premier business partner, can help with analytics and predictive, targeted, credit-based marketing to identify and engage your credit union’s most likely loan candidates, whether the target is auto loans, credit cards, mortgages, home equity, personal loans or even student loans. If you have a 2018 goal to grow revenue and loans, know that you are not in it alone.

Posted by Mr. Anthony Burnett, Customer Experience Director, LEVEL5, LLC on 12/21/2017

Consumers love the branch, so how do you get the one you want?

U.S. Consumers and the Branch. There is no denying that the number of branches in operation today is less than before the great recession. However, simply pointing out there are fewer branches is only part of the story. For example, when you consider a recent a IMF study, the number of branches is rising.

Per their research, the peak of branches per capita was 35 branches in 2009. The low point was 33 in 2014 – the same level as 10 years earlier. But in 2015, the number of branches per 100,000 started rising again.

Let’s Talk about the S-Word. So instead of another article focusing on if the branch is important, let’s talk about one of the key steps in making sure when you do branch – you get what you want. Let’s talk about Site Selection.

Good to Great: Site Selection

First Things First. The first step in site selection is not the real estate procurement, but establishing the business case. Site selection is the marriage of market analysis and real estate procurement.

In a fintech and omni-channel banking world, understanding why to invest in the branch is crucial. And for credit unions – that’s loans and deposits.

Begin with the End in Mind. Therefore, when it comes to site selection, the approach matters. Here’s why: If the business opportunity in a market can support the branch – historically branch profitability is achieved at $25 million in new deposits – then the critical component that takes the opportunity from good to great is how to procure the real estate.

Face the Brutal Facts. Selecting the best site for a branch or main office opportunity is not a matter of selecting the right broker. Brokers can serve a role in selecting a site, but brokers are not the answer. In site selection (market analysis and real estate), it is about realizing business opportunity - loans and deposits.

A Retail Perspective. In retail development, there are two users that every owner wants – pharmacies and credit unions. Owners of land understand the correlation of location and performance…and they understand that business opportunity is worth a hefty price.

Good is the Enemy of Great. But what if you could get the property you want, and the owner would not know it is you? You could avoid the premium for the industry and have a greater opportunity for the business to perform.

Furthermore, what if the site selection approach negotiated contracts and performed all due diligence (surveys, environmental; and geotechnical test)? 

A broker doesn’t study markets to define loans and deposits, they don’t negotiate contracts, and they do not handle due diligence. So, site selection in today's competitive market is so much more.

Actionable Strategy

Getting what you want. For branch or main office opportunity to be realized, then the process has to move from strategy into action. Many firms speak to market opportunity or operations analysis, and even more firms design and construct financial facilities. However, it is taking action on the best location that brings branching and main office solutions to life.

Site Selection is only one piece of the puzzle to successful branching, but going from Good to Great can be the key to achieving your branching goals.

If you want to learn more on this topic an others about branching - click here.

Categories: Education & Training, Research, Sales & Service, Strategic Planning & Consulting
Posted by Mr. Doug Foister, Vice President of Research, Cornerstone Credit Union League on 12/20/2017

Pardon the acronyms, but there is a new social norm in America that is quickly eliminating Americans’ excuses for not paying their friends back in a timely manner. And we need to pay close attention. A recent Bank of America survey reveals that 36% of adults currently use a person-to-person payment service (P2P), with Millennials leading the pack at nearly double that rate (62%). Furthermore, 45% of current non-users say they plan to start using the service within the next year. Following are some additional findings that reveal the drivers of the phenomenal growth of this new technological force.

Who is using P2P? While Millennials are the most prevalent users, adoption of P2P is strong across all generations. Gen Xers clock in at 34%, Baby Boomers at 20%, and Seniors at 10%. However, nearly half of those who do not use P2P presently anticipate they will use the service in the coming months, with Baby Boomers (49%) and Gen Xers (48%) being most likely to do so.

What is influencing the use of P2P? Time savings and peer influences are the top motivators.


What do people use P2P for? Practicality tops the list with shared bills, closely followed by expenses for gifts and travel. Younger Millennials (18 – 24) are the most active P2P users.


How much will consumers send using P2P? Nearly half of the survey respondents would be comfortable sending $1,000 or more.

consumer spending

Without question, P2P is a growing powerhouse in the next era of banking. With technology developing faster today than at any time in history, we must understand how consumers, which includes our members, are embracing emerging technologies such as P2P as they attempt to make sense of their financial lives.

Categories: Marketing & Printing, Research, Technology Consulting & Compliance
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