HOBART, Ind.-Many credit unions rely on shared branching networks to make banking more convenient for their members, and often that means simple transactions.
But Midwest Carpenters & Millwrights FCU here has found success building loans through shared branching and, as a result, its efforts have earned it a Credit Union Journal "Best Practice" award for the shared branching category.
Shared branches-or service centers, as they're known among members-have been a boon for the credit union.
"We have always had a very aggressive effort to get our members to do loans with us," explained CEO Bill Lowry. "The service center concept was truly designed to make weekly banking and financial transactions convenient. We wanted to gain a market share of checking accounts and all the other products and services that we have, but apparently we were the only ones that really pushed to close loans there. Some credit unions say 'Well, they charge $10 to close it,' but if it's a $20,000 vehicle loan, guess how much interest we're going to make?"
The $83-million MCMCU serves more than 15,000 members, yet it has just 13 staff members. So the credit union relies on more than 4,000 shared branches throughout the country available through CU Service Centers.
"We're able to keep up with solid loan growth because we utilize the service centers in Indiana and Kentucky who will close our loans for us," said Lowry. "There's absolutely no reason for [a member] not to be able to get a loan the same day and close it that evening at a service center. By specifically targeting members in those areas, we can gain some market share. When guys go out on the work trailer the next day and talk to the four or five guys-or maybe 30 guys at lunch-they can say 'The credit union, even though they're in Hobart, was able to get my loan the same day.'"
That powerful word of mouth is one of the ways the CU continues to grow, but union membership is also key. Lowry himself is a card-carrying union member and often speaks at meetings throughout Indiana, Kentucky and, most recently, Ohio. Midwest Carpenters & Millwrights also advertises in union publications, which helps expand its reach. "We're very fortunate in that we have a distinct advantage: we have had the same common bond for 51 years," said Lowry.
Different Place, Same Experience
When it comes to applying for a loan, Lowry said that the CU strives to make the experience of working with a service center nearly identical to that of MCMCU's headquarters. "You get in line, go up and explain to the teller that I'm from the Carpenters Credit Union, and they told me I could come here to pick up an application." Those apps (which are also available online) are then faxed back to MCMCU, the loan is processed and the member can return to the service center later that day to close the loan.
Not surprisingly, 2011 has been a tough year for loans. "Unfortunately, during an economic crisis or downturn, the construction industry is usually one of the first hit," noted Lowry. "So we have guys that are losing their homes, losing everything, and guys that have made well over $100,000 this year, because if we have work, it's booming."
Still, the credit union has seen a net increase of $235,000 in loans over the last three months, and it is currently about 70% loaned out, with $55 million in outstanding loans and leases. Those numbers include nearly $17 million in vehicle loans, one of the credit union's biggest offerings. "The surprising thing to most people is that we do more used vehicle lending," said Lowry. "The majority of our guys that need pick-up trucks, they're not going to go out and buy a $20,000 or $30,000 pick-up truck to take it out on a construction job."
For other credit unions seeking to emulate MCMCU's success, Lowry recommended breaking down demographic data and dissecting zip codes to probe where members and potential members reside.
"Break it down: do they have more than just a savings account, checking and so on? And then systematically go after whatever you're trying to capture, whether it's a checking account or business lending," he said. "You just have to start somewhere and start small, because it has a tendency, in my opinion, to continue to evolve to where you can have some success."
