In Lending, `Don't Try Being Good at Everything'

SALT LAKE CITY – With credit unions witnessing a downward slide in their auto loan portfolios, a group of Utah executives heard some do’s and don’ts about ways to reverse the trend including “stop trying to be good at everything and focus on something you do well.” That advice came from Rory Rowland, an Independence, Mo. consultant and former CEO of Kansas City area CUs, who told the annual meeting of the Utah League of Credit Unions that many CU managers concentrate on too many products and the result is a poor public image. “The public distinguishes those credit unions that stand out with specific products that meet their needs,” said Rowland arguing that the CU that promotes a potpourri of products and services like home equity, indirect lending, IRAs and Visa cards can lose identity. But the institution that concentrates on one service and performs well at it can reap wide benefits, he said, citing, for example, an automated credit scoring system called TAPS (Total Account Processing System) offered by Forum CU of Indianapolis which has drawn many new accounts and since sold the package to 40 CUs nationwide. In urging CUs to speed and simplify loan paperwork, Rowland pointed to pre-approval applications pushed successfully by Pacific Service FCU of Walnut Creek, Calif. and combined loan/membership applications offered by others. And in a breakout session at the League meeting called “Top 100 Credit Unions in Lending,” Rowland suggested that “why not follow Pentagon Federal and Navy Federal and charge the same rate for new and used cars.” Both CUs have experienced “tremendous success,” he said. On e-commerce, he said the CU loan staff ought to be examining the simple Web applications offered by E-Loan Corp of Pleasanton, Calif. and LendingTree Inc. of Charlotte, N.C. to pick up ideas on changing application procedures. For one thing, requiring exhaustive data from A and B borrowers is nonproductive when minimum info is needed. “Why verify income on an A and B borrower?” he asked. Also Rowland questioned whether debt ratios are accurate predictors of a member’s ability to borrow and pay back a loan with interest. “Regulators can recommend but they can’t demand,” concluded Rowland. “If you are running a safe and sound institution, then you can get rid of debt ratios.” [email protected]