Only Paranoid Lenders Survive, Rowland Declares

INDEPENDENCE, Mo. – Determined your credit union should be a leader at lending, but convinced the competition is out to get you? Great. You just might make Rory Rowland’s list of the Top 100 credit unions in lending. As for fretting about your rivals, consider the title of a recent presentation Rowland made for the Tennessee Credit Union League: Only the Paranoid Lenders Survive. Rowland is founder of Top100CU.com, a research and consulting firm. About four years ago he began identifying top credit unions in categories such as electronic services, fee income and lending, then contacting them to learn more about what they do. “They were excelling because they were always worried about the competition,” Rowland discovered. ” `They’re out to get us. How do we get better and faster and quicker?’” He believes large credit unions particularly are keenly aware of this, are responding by making it faster and easier for members to obtain loans, and as a result are growing more rapidly than small credit unions. “ Credit unions under $10 million or $8 million are not growing as fast and they don’t put as much emphasis on growth. I think that’s going to be a serious downfall for them. You have to grow to survive in this market,” Rowland says. “Boards need to set goals for their loan-to-share ratio, and realize they will not grow the credit union until they achieve loan growth.” Rowland says credit unions with high loan-to-share ratios have a “we make loans” mindset. By contrast, those in the 40 to 50% range emphasize improving their investment portfolios or cutting expenses. Another key is becoming an expert at a specific lending niche. Rowland cites as an example Evangelical Christian Credit Union in Brea, Calif. One hundred percent of its deposits are invested in loans to churches, church schools and missionaries. “If you go to their Web site, www.eccu.org, you’ll see it carries out that kind of mission. What they’ve decided to do is what I call the Three Fs: follow their strategy, focus on that strategy for a number of years, and finish better than anybody else. They really do it better than anybody else,” Rowland says. Another factor he’s identified among lending leaders is they promote a catchline that’s quick and easy to remember. At ECCU, it’s “Your mission is our ministry.” “Top lenders are also experts at what they do. Another credit union that does a great job, in fact it’s one of the top five in business lending, is Central Minnesota Credit Union. Their lending focus is dairy cows. “Richard Odenthal, the CEO, says they began to recognize they could track their deposits by the price of milk. They follow that, and it gives them an indication of what their cash flow is going to be so they can kind of plan for the future. “That’s being an expert – you know more about your area of expertise than anybody,” Rowland declares. He identifies still one more trait shared by top lenders. The old clich says it’s not what you know, it’s who you know. Instead, top lenders realize it’s who knows you. Once they’ve identified a niche, they make certain everyone in the community knows that’s what they do. Turn members into borrowers, Rowland urges. Merge your membership application with a loan application, and work at recapture programs. One Texas credit union offers members $100 if they can’t meet the loan deal the member has elsewhere. The credit union also offers employees $50 if they recapture a loan from a competitor. -