2 Strategies To Achieve Efficiency Beyond Your Weight Class

These two mid-sized credit unions hold their own in terms of employee productivity and efficiency, even when compared to larger peers.

At the end of third quarter 2014, the average U.S. credit union asset size was approximately $173 million, according to Callahan Associates.

That’s not small, per se, but it’s not huge either, especially in a world where size and scale are considered fundamental requirements for top-notch productivity and efficiency.

The two mid-sized credit unions featured here prove that assumption dead wrong. A look at indicators such as the amount of loans originated per employee, members served per employee, and the efficiency ratio show these organizations stand tall above their peers. What’s more, these two institutions hold their own against credit unions that have size and scale behind them.

Waterbury CT Teachers Federal Credit Union

Versus Its Peers

Among the 716 credit unions with $100 million to $250 million in assets, Waterbury CT Teachers Federal Credit Union ($232M, Waterbury, CT) ranks 36th for the highest dollar amount of loans originated per employee as well 25th for number of members per employee, two metrics that indicate its staff is productive. With a 77.8% efficiency ratio, Waterbury CT Teachers beats out a majority of its peers in this regard as well.


Waterbury CT Teachers FEDERAL Credit Union
data as of 09.30.14

  • ASSETS: $232M
  • MEMBERS: 17,228

Versus Larger Credit Unions

When compared to the average productivity and efficiency levels for credit unions with $1 billion or more in assets, Waterbury CT Teachers performs better than 95% with regard to members per employee, better than 68% with regard to the dollar amount of loans originated per employee, and better than 42% with regard to the efficiency ratio.

How Waterbury CT Teachers Did It

As the 22nd credit union chartered under the Federal Credit Union Act,Waterbury CT Teachers has been serving public and private school teachers and their families across the western portion of the state since 1934.

The credit union is committed to serving its roster of more than 17,200 members, but doing so means it must focus on the products and infrastructure that meets its institutional makeup and operational philosophy,says CEO George MacDonald.

We’re only paying for what members use rather than having cash just sitting around and paying for all the processes that come with it.

For one, the credit union does not offer cash at either of its two branches. Instead, it relies on online, telephone, and other remote channels for most transactions and has an agreement with local banks should members want to cash a share withdrawal check.

Members also can use any of three credit union-owned ATMs. And should they choose to use any other ATM in the country, the credit union usually fully refunds transaction surcharges.

We’re only paying for what members use rather than having cash just sitting around and paying for all the processes that come with it, MacDonald says.

The credit union’s cash transaction strategy allows its employees to not only serve more members than their peers but also focus more heavily on relationship development during those interactions.

Marketing isn’t just one person in an office creating ads, marketing is everyone’s job, MacDonald says. Soinstead of teller lines, our representatives have desks where a member can sit and talk with them.

To encourage that activity, the credit union incents staff for cross-sold loans as well as recaptured loans from other institutions, with the caveat that the new loan must save the member money. It also uses a similar incentives strategy for things like checking accounts as well as efficiency drivers like eStatements.

Want More Data?

Check out the CreditUnions.com GRAPHIC OF THE WEEK for a sampling of productivity and efficiency metrics.

In addition, Waterbury CT Teachers has slowed much of its first mortgage, HELOC, and Second Mortgage lending activity which required hefty, ongoing investments in sales and support services by adjusting its pricing and shifting institutional resources to areas of the portfolio where it sees more need and value.

As of third quarter 2014, total loans at Waterbury CT Teachers were up 6.5% year over year, led primarily by auto, visa, personal, and student loans, including an in-house managed graduate school loan.

Lastly, the credit union is one of a few in the nation that still offers free life insurance up to $2,000 on the primary member as well as up to $30,000 loan protection insurance on every loan made.

These benefits cost the credit union approximately $300,000 a year,but the extra value this presents for members is worth the cost, as evidenced by the credit union’s 5.4% year-over-year member growth.

We’re not out to make money off the backs of our members for these services,MacDonald says.Instead, because of our low overhead, we don’t have to worry as much about profit and can make sure everything we offer our members is the best option available for them.

Next: The $213M Texan Example

Energy Capital Credit Union

Versus Its Peers

Energy Capital’s third quarter 2014 performance in regard to the dollar amount of loans originated per employee and members per employee put it in the top 15% and top 30%, respectively, for organizations $100 million to $250 million in assets. Its 82.6% efficiency ratio put it ahead of 69% of comparable peers.

Versus Larger Credit Unions

When compared to credit union with $1 billion or more in assets, Energy Capital boasts a better efficiency ratio than 69% of them. The credit union also bests approximately 37% of the group in regard to the dollar amount of loans originated per employee, although it is more conservatively positioned than large players with respect to members per employee.

How Energy Capital Did It

Founded as a credit union for ExxonMobil employees, the now community-chartered Energy Capital Credit Union ($213M Houston, TX) serves approximately 18,300 Houston area members, a majority of whom are also A credit borrowers.


Energy Capital Credit Union
data as of 09.30.14

  • ASSETS: $213M
  • MEMBERS: 18,319

That’s a good thing of course, says CEO Randall Dixon, but it also forces the credit union to focus on productivity and efficiency to hold the yield on competitively priced assets. Energy Capital must also find new levers for profitability outside of fee income.

As a first step, the credit began diversifying its offerings, adding income drivers like a brokerage product and even starting its own indirect auto CUSO called the Credit Union Acceptance Corporation, which now serves several hundred credit unions in five states.

In 2012, it created a lending plan that called for 80% loan growth by the end of this decade. So far, it is on track to reach that goal, thanks in no small part to an exclusive recapture partnership through the California-based National Auto Lender Network as well as a healthy boat, RV, motorcycle, and other recreation vehicle lending portfolio.

Although many credit unions might consider the latter of those programs to be more of a niche offering, the credit union grew this portion of its business by approximately 16% in the past year alone, Dixon says.

Giving front-line employees a broader suite of products and services to sell was a big step forward for the credit union, yet it wasn’t the only step. If fact, one of Energy Capital’s biggest market differentiators today occurs entirely outside of the public eye.

As part of its organizational fitness model, Energy Capital has assigned key performance indicators to each and every one of its 46 employees, including support services.


This chart from Energy Capital Credit Union shows the moving pieces of its organizational fitness model. The pieces build from a narrow, individual focus to a more holistic, macro scale.

These custom metrics don’t just look at the amount of work done, says Linda Pearsall, the credit union’s executive vice president, but also how fast and how accurately the work gets done.

For example, IT staff must resolve issues in a certain amount of time while accounting has a limit for the number of departmental errors and corrections in a given period.

Our first year was just spent benchmarking, Dixon says, Then we started looking to improve upon those numbers every subsequent year.

In all, most staff members have five to six metrics they own, track, and compile each month to discuss with their supervisors as part of their ongoing employee performance evaluations.

This not only helps reduce the level of bureaucracy but also helps employees stay true to the policies that remain because they don’t have so many to keep track of.

Individual benchmarks roll back into larger goals, first at a department level, then on the balance sheet. Individuals and groups who go above and beyond in their contributions to that organizational progress receive special recognition and rewards.

The credit union supported such measures by adding a new CRM system that along with a transition to a paperless business model has helped establish and keep a chain of custody over key documents, information, and points of member interaction.

The worst-case scenario in customer service is when you call in and have to explain your issue four different times to four different people, Dixon explains.

Investments like this underpin the commitment by staff and executives to review and challenge company procedures and policies with the goal of sunsetting items, policies, and systems that have become outdated or otherwise unnecessary.

This not only helps reduce the level of bureaucracy, Dixon says, but also helps employees stay true to the policies that remain because they don’t have so many to keep track of.

February 9, 2015

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