“ARM” Isn’t A 4-Letter Word

The high interest rate environment led Tucson Federal Credit Union ($749.4M, Tucson, AZ) to roll out Fixed4Five, an ARM option that offers a 5% fixed rate for the first five years. After that period, the loan adjusts on a five-year basis with increases capped at two percentage points and a five-point limit over the life of the loan. The intent, explains Ashley Kemp, vice president of lending and solutions, is to make homeownership more accessible and affordable for members.

“ARM was such a bad word for so long after 2008-2009,” Kemp says. “People didn’t want to hear about it. But our branch staff is comfortable talking through this product with members so they feel comfortable.”

That said, the credit union isn’t about to force members who aren’t comfortable with ARMS into one. Traditional fixed-rate mortgages are available for borrowers who are more comfortable going that route or in instances where it makes more sense than an adjustable option.

Approximately 1,500 miles away, Veridian Credit Union ($8.0B, Waterloo, IA) has always focused on ARMs, but the interest rate hikes of the past couple of years have made that product substantially more attractive to members, says Kara VanWert, chief lending officer.

“The mindset and the knowledge today about refinancing your house is very different from what it was in 2009 and 2010,” VanWert says. “I don’t think there’s that fear of ARMs like there used to be.”

It’s All In The Approach

Both credit unions emphasize the importance of education.

Veridian offers 5/1 and 7/1 ARMs and approaches the subject when discussing how long members expect to be in the home. If they’re only planning for five or seven years, the ARM might be the best option because they’ll have moved on before the rate resets. This is an important product at Veridian because it focuses heavily on younger borrowers, many of whom are looking for starter homes.

“Usually when you buy your first home, you don’t think you’ll be there forever,” VanWert says.

To ensure members get the most accurate information possible, Veridian directs all questions to mortgage loan officers, who likely know the product and the market better than front-line staff.

“The most common question we get is about rates — is my payment going to go up $2,000 after these first five years?” says Tucson Federal’s Kemp.

To combat those fears, the credit union goes into detail explaining the math around indexes and margins so members know how the product works. It even breaks down the worst-case scenario, which at a 5% adjustment over the life of the loan won’t double the borrower’s mortgage payment.

Discussions at both credit unions also focus on the fact that ARMs can help members afford more house than they might get with a traditional fixed rate. Veridian sweetens the deal even further by offering a 100% financing option.

Part of the education process includes helping members understand how the ARM environment is different today compared to before the housing crisis. Rates were already low back then, so expecting them to drop further once rates adjusted was a bad bet. Additionally, many of the bad actors that caused the housing crisis were employing lax underwriting criteria and putting borrowers into homes they couldn’t afford with loan structures that were destined to cause problems, including interest-only payments and no-downpayment loans. In other words, the adjustment wasn’t the problem — it was merely the straw that broke the camel’s back on loans designed to benefit lenders rather than borrowers.

But, both credit unions recognize an adjustable-rate product isn’t for everyone.

“If members are that uneasy, they shouldn’t be in an ARM,” Kemp says. “Our CFO will be the first to tell you we don’t predict rates — you never know what’s going to happen. If members are that concerned with what could happen, it’s probably better for them to be in a fixed rate.”

Rising interest rates make fixed-rate mortgages less attractive. Read “Higher Rates Bring More Non-Fixed Mortgages” for Callahan’s take on how appetites for adjustable-rate mortgages have changed in the past 20 years and what the future could hold.

The Security Is In The Structure

Associated Credit Union ($2.2B, Norcross, GA) takes a different approach. Rather than a 5/1 or a 7/1, Associated offers a 15/15 split, fixing the rate for the first 15 years of the note, making a one-time adjustment at the 15-year mark, and fixing the rate for the second half of the note at a level based on the five-year Treasury with a maximum margin of 250 basis points up or down and a maximum adjustment of 5% above the initial rate.

“We’ve seen from historical data that most members don’t stay in a mortgage for more than five to seven years, so they’ll never see that interest rate adjustment,” says Chad Evans, executive vice president of lending. “That puts stability in the member’s mind. Most consumers are homed in on a 30-year fixed for the stability, and it’s hard to talk them out of it.”

The 15-year window, he adds, helps members feel secure about the initial term — and because many don’t expect to be in the home when the rate resets, the adjustment is far less of a factor. External factors such as rising property taxes and homeowners’ insurance premiums have also made the product more attractive, Evans says.

When it comes to promoting the product, Associated’s efforts to educate local real estate agents has been instrumental in getting the word out, as has a comparison calculator on the credit union’s website that shows the difference in interest rates and how payments could change post-adjustment.

“We feel a responsibility to let them know what happens at the end of that 15 years,” Evans says. “If they do make it to the end, they need to know there’s a possibility their payment could change.”

Rising rates have made ARMs an easier sell, but the real key to success lies in listening to members and staff, the EVP emphasizes.

“There’s risk in anything we do — reputational risk, interest rate risk, ALM risk — but you have to put the customer first,” he says. “Your staff is your front line. They’re talking to members and hearing what the challenges are. If you listen to your people and try to develop products and services that satisfy the challenges they’re hearing, it goes so much better.”

The post Embracing ARMs And Battling Members’ Misconceptions appeared first on CreditUnions.com.

FIRST MORTGAGE ORIGINATION BY TYPE
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

The NCUA defines a balloon/hybrid mortgage as a one-to-four-family residential property loan that has a balloon feature — i.e., the borrower makes lower monthly payments for a set period but then must make a large, lump sum “balloon” payment at the end of the term —  or converts to an adjustable-rate loan after a predefined period. Therefore, many balloon/hybrid mortgages eventually turn into an ARM as well.

Strategic Insights

• With many market prognosticators expecting the Federal Reserve to cut interest rates in the near to medium term to spur economic activity, many borrowers are banking on their adjustable-rate mortgage to give them access to lower rates without incurring the fees associated with a refinance.
• The increased popularity of adjustable-rate mortgages has shifted the composition of the industry as a whole. As of Dec. 31, 2024, 65.5% of outstanding first mortgages were fixed rate, 11.0% were adjustable, and 23.5% were balloon/hybrid. By comparison, in the first quarter of 2022, when interest rates started to increase, 76.2% of outstanding first mortgages were fixed rate, 8.6% were adjustable, and 15.3% were balloon/hybrid.
• Despite the current popularity of products that offer adjustable rates, many borrowers misunderstand the potential advantages and drawbacks of such loan options. In response, credit unions are working to educate their members on the ins and outs that come alongside these loan types. Learn more about these efforts in “Embracing ARMs And Battling Members’ Misconceptions” on CreditUnions.com.

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The Federal Reserve is projected to cut rates several times in 2024; however, even if it does, soaring prices and dwindling savings leave Americans with little incentive to make a big purchase.

YTD LOAN ORIGINATIONS
FOR U.S. CREDIT UNIONS | DATA AS OF 3.31.2024
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

• Total loan originations for U.S. credit unions declined 15.6% year-over-year to the lowest first quarter total since 2019. Non-real estate loan originations declined 18.3%; real estate fell 9.9%.
• A HELOC boom cushioned the decline in real estate originations. That origination category — other residential real estate — increased 6.7% year-over-year. Members are using the equity derived from higher home values to make home improvements, consolidate debt, and fund major purchases.
• Commercial real estate originations fell 25.8% year-over-year, a milder decline than in the first quarter of 2023. Commercial originations comprised 14.7% of total real estate originations, down 3.1 percentage points from a year ago.
• Non-real estate originations declined 18.3% year-over-year, largely driven by credit unions tapping the breaks on indirect lending. The active origination years of the pandemic are over; fortunately, the rates of June 2024 rates offered stronger loan yield and revenue for lenders.

Are You Leaving Loans On The Table? Use industry data to dig into credit union performance, evaluate your market, uncover new areas of opportunity, and support strategic initiatives. Do you know how you compare to peers? Callahan’s credit union advisors are ready to show you. Request A Peer Suite Demo Today.
CREDIT UNION MARKET SHARE OF ORIGINATIONS BY PRODUCT
FOR U.S. CREDIT UNIONS | DATA AS OF 3.31.2024
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

• Credit unions surrendered market share in both auto and first mortgage in the first quarter of 2024; revolving consumer loan market share was unchanged. The fall in auto represents a return to the industry’s historical norm.
• Credit unions might be shying away from used autos in particular because of declining asset quality — used auto loan net charge-offs spiked to 1.03% in the first quarter of 2024. Autos sourced through indirect channels are also suffering from worsened asset quality, further exacerbating the credit union pull-away from indirect partnerships.
• Suppressed production of new cars in 2020 and 2021 has trickled down to create a low supply of used cars in today’s market. Meanwhile, the supply of new cars has recovered, but consumers are struggling to afford the higher borrowing costs. This dynamic is pushing dealers to offer better incentives for new cars, making them the most affordable — based on how many weeks of income it takes to purchase the average new vehicle — since July 2021, according to Cox Automotive.

RESIDENTIAL FIRST MORTGAGE ORIGINATION COMPOSITION
FOR U.S. CREDIT UNIONS | DATA AS OF 3.31.2024
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

• From December 2023 to June 2024, high rates and home prices have created a lethal combination of affordability in the mortgage market. Financial institutions would readily lock in 30-year mortgages at today’s high rates, but prospective homebuyers are less inclined. Those interested in homeownership are adopting a wait-and-see mentality, hoping affordability improves.
• Current trends in first mortgage originations show a strong borrower preference for adjustable rate and balloon/hybrid mortgages. Two years ago, when interest rates were only beginning to rise, fixed-rate mortgages comprised 80.2% of originations. Today, they comprise 58.9%, which is on par with the years prior to 2020. Higher rates have also dampened refinance activity, as the majority of mortgages are locked into low rates.

The post Originations Slide As Lenders Tighten Underwriting appeared first on CreditUnions.com.

RESIDENTIAL FIRST MORTGAGE ORIGINATIONS AND MARKET SHARE
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© Callahan & Associates | CreditUnions.com

The average rate on a 30-year fixed-rate mortgage spiked significantly in 2022 and remains elevated today as policymakers work to combat inflation. Costlier financing on top of inflated home values has pushed consumers to shy away from long-term mortgage loans in favor of alternative options, such as adjustable-rate and balloon/hybrid products.

• According to Freddie Mac, 30-year fixed rates rose a full percentage point in March of 2022 alone, reaching 4.67% at the close of the quarter. Fixed rates continued to soar throughout the following year and closed the first quarter of 2023 at 6.32%.
• ARMs and balloon/hybrid products generally offer lower monthly payments, initially, compared to a fixed mortgage, giving borrowers a break in today’s pricey real estate environment.
• A year-over-year drop in total mortgage originations contributed significantly to the decline of fixed-rate mortgages. High rates have suppressed demand, especially for refinances, which usually offer fixed rates.
• By opting for non-fixed mortgage types, members are gambling that rates will fall before their introductory period ends. Home equity values also must remain high enough to allow for a future refinance. Although non-fixed loan types can be beneficial given the circumstance, credit unions must educate homebuyers of the risks inherent in these alternative sources.

Does Your Mortgage Performance Stack Up?

Take a data-driven look at leaders and competitors in your financial market with Peer. Backed by data from HMDA, the 5300 Call Report, and the U.S. Census Bureau, Peer offers endless opportunities to pull custom research to make strategic, member-driven decisions for your institution.
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The post Consumers Are Shying Away From Fixed-Rate Mortgages appeared first on CreditUnions.com.

RESIDENTIAL FIRST MORTGAGE ORIGINATIONS AND MARKET SHARE
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© Callahan & Associates | CreditUnions.com

• First quarter originations of residential mortgages at U.S. credit unions dropped 52.2% compared to the same quarter last year. Total dollars originated in the first three months of 2023 reached only $27.6 billion, a clear sign the pandemic-era origination frenzy is over.
• Despite the slowdown, the credit union market share of originations remained relatively flat at 8.3%.
• A remarkable 55.7% of first mortgage originations were adjustable rate or balloon/hybrid, a stark contrast to the first quarter of 2022 when only 19.8% were non-fixed rate.

How Do You Compare?

Learn how your institution’s mortgage performance stacks up against peers and the industry. Callahan’s Peer Benchmarking Suite makes it easy for credit union leaders in any role to measure performance, identify new opportunities, and support strategic plans.
LEARN MORE TODAY

The post Mortgage Originations Drop. Market Share Remains Flat. appeared first on CreditUnions.com.

That’s because loan participations are clearly on the rise while sales into the secondary market remain dominant but relatively flat among America’s member-owned financial cooperatives.

As we reported in our second quarter Trendwatch, first mortgage market share rose 90 basis points year over year to 8.2%. Just more than a third 33.8% of that $134.4 billion in originations year-to-date have been sold into the secondary market. Five years ago, that was 50.4% of $112.5 billion in first mortgage originations sold off in the first six months. ContentMiddleAd

PERCENT OF YTD MORTGAGE ORIGINATIONS SOLD TO SECONDARY MARKET

FOR ALL U.S. CREDIT UNIONS | DATA AS OF 06.30.17

While mortgage volume has risen, the percentage of mortgage originations that credit unions sell to the secondary market has steadily declined in the past five years.

Source: Callahan & Associates.

Meanwhile, on June 30, 2012, U.S. credit unions had $2.5 billion in outstanding sold participation loans and $10.7 billion in purchased participation loans outstanding. Five years later, those numbers have risen sharply to $6.0B and $26.4 billion, respectively.

PARTICIPATIONS PURCHASED AND SOLD AS A PERCENTAGE OF TOTAL LOANS

FOR ALL U.S. CREDIT UNIONS | DATA AS OF 06.30.17

Credit unions in the $50 million to $100 million asset range have been particularly active buyers of participation loans, representing 8.99% of their total loans in the second quarter.

Source: Callahan & Associates.

We see a few drivers here. One is rising interest rates of late boosting the popularity of ARMs and hybrid/balloon notes, which credit unions may prefer to hold or sell into participations rather than meet the requirements for selling those to Fannie Mae or Freddie Mac.

FIRST MORTGAGE BREAKDOWN

FOR ALL U.S. CREDIT UNIONS | DATA AS OF 06.30.17

Fixed-rate notes still dominate, but balloon/hybrid and adjustable rate mortgages have also risen in equal proportions in the past five years.

Source: Callahan & Associates.

Another is that success in selling first mortgages is outstripping the capacity for some credit unions to handle all that servicing. That might be part of the reason that the 754 credit unions in the $50 million to $100 million asset band have the highest percentage of their portfolio sold off as participations. They’re big enough to aggressively market and manage the mortgage sales process but may not have the scale to service it, or the appetite and capacity for the accompanying interest rate risk.

And then, there’s diversification of the loan portfolio, another way to help dampen interest and delinquency risk.

LOAN-TO-SHARE RATIO

FOR ALL U.S. CREDIT UNIONS | DATA AS OF 06.30.17

The loan-to-share ratios for credit unions by asset class creates a stepladder down in this bar chart using second quarter 2017 data in the Callahan & Associates database.

Source: Callahan & Associates.

Of course, that’s true in different degrees in all asset classes and no two credit unions are exactly like. There’s also this: Many credit unions have always liked to work with other credit unions when they can, in this case helping to raise liquidity for themselves while providing much-needed earning assets for the participation buyers.

No matter the motivation, or combination of them, while originations were hitting an all-time high in the second quarter, fixed-rate mortgages were accounting for 58.2% of the $373.7 billion in new notes year-to-date, compared with 61.2% for the $244 billion generated in the same period of 2012. Balloons and hybrids accounted for 26.7% of 2017 year-to-date originations, up from 24.1% five years ago, and ARMs got 15.1%, compared with 14.6% in the first six months of 2012.

Another Perspective On Your Mortgage Lending Performance

Comparing your mortgage lending performance against peers provides context to your numbers. Callahan’s analytics software lets you do it within minutes.

Taken in one five-year chunk, we can see that credit unions originated $373.7 billion in the first six months of 2017, up 53.1% from $244 billion in the same time frame five years ago. The growth leader again is balloons/hybrids, which jumped 69.6%, followed by ARMs at 58% and fixed rates at 45.5%.

Meanwhile, second quarter 2017 data from Callahan & Associates shows a stairstep correlation between asset size peer groups and loan-to-share ratios. The highest was 81.71% among the 284 financial cooperatives of more than $1 billion in assets while the lowest was 53.77% for the 759 that were between $10 million and $20 million in assets at mid-year.

So, we’ll just have to see if the smaller credit unions will try to ramp up loan growth with all that liquidity. And even among all asset classes, there’s room to grow, and loans to share.

Liz Furman is a Senior Industry Analyst at Callahan & Associates. She can be contacted at 202-223-3920 or efurman@callahan.com.

This article appeared originally in the Credit Union Times in September 2017.

The post Participations Grow While Secondary Sales Slow appeared first on CreditUnions.com.

In her presentation for January’s CUtv event A New Role for Volunteers, Patsy Van Ouwerkerk, CEO of Travis Credit Union ($1.6B, Vacaville, CA), outlined five key strategies to encourage active, powerful volunteerism.

• Representation: Whether through charter conversions, SEG additions, or organic demographic changes, a changing membership should be reflected in the Board’s makeup. Consider age, background, and length of membership among other factors when evaluating potential Board members.
• Outreach: Ask all volunteers from rookies to veterans to share the responsibility of representing the credit union at community events. Recruit volunteers from within the community and the existing membership. Partnercredit union staff with the Board to foster interaction and deepen relationships throughout the credit union.
• Training: Volunteers need to know about credit unions from the inside out. Create a comprehensive curriculum that covers big-picture items such as the industry’s history and the credit union difference as well as credit union-specificinformation such as organizational structure and operations.
• Succession: An orderly transition is just as important for volunteers as for management. Institute an emeritus volunteer program to facilitate turnover.
• Expectations: Be clear about the Board’s responsibilities. Set standards for attendance, advocacy, and continuing education. Don’t be scared to dismiss volunteers who are not fulfilling their duties.

To learn about Travis Credit Union’s Volunteer at Large program, watch Van Ouwerkerk’s CUtv presentation below:

To learn more about how credit unions can best utilize volunteers, watch A New Role for Boards? Expanding your Reach in the Community through Active Board Member Ambassadors.

The post Five Ways to Encourage Powerful Volunteerism appeared first on CreditUnions.com.

percentage of online adults who use social media sites
Data Collected From 2012-2014

Source: Pew Research Center

Some highlights from the survey:

• 52% of online adults 18 years or older use two or more social media sites, up from 42% in 2013.
• 56% of all online adults 65 and older use Facebook; thats 31% of the entire U.S. population of senior citizens.
• 53% of online adults ages 18 to 29 use Instagram; 49% of all Instagram users use the site daily.
• The share of college-educated Internet users that use LinkedIn reached 50%.
• 42% of online women use Pinterest; 13% of online men use Pinterest.

As use and engagement levels continue to increase, social media channels remain a marketers dream a large and diverse arena in which to promote a brand. But the return on investment for smaller companies has proved elusive. Some companies, credit unions among them, focus less on finding a quantifiable financial return from social media marketing and instead look at it as a tool to engage potential memberswith interesting branded content.

Here are three strategies from three different credit unions who take an engagement approach to social media marketing.

Save This, Buy That

In 2012, Member One Federal Credit Union($680.5M, Roanoke, VA) noticed a pattern in the responses to its annual member experience survey. Members were interested inlearning more about budgeting and saving strategies, and the credit union knew it could help. By early 2013, Member One had launched a social media brand called Save This, Buy That, which now includes a micrositeas well as Facebook, Twitter, Pinterest, and Instagram pages.

CU QUICK FACTS

member one federal Credit Union
data as of 12.31.14

• HQ: Roanoke, VA
• ASSETS: $680.5M
• MEMBERS: 83,249
• BRANCHES: 14
• 12-MO SHARE GROWTH: 10.91%
• 12-MO LOAN GROWTH: 16.12%

Our goals were to gain exposure, engagement, and new followers and to drive potential new members to the credit union, says Tara Lilly, marketing supervisor. The whole concept behind it is to build relationships and trust with peopleand relate to them in a new way.

On SaveThisBuyThat.com, the credit union posts once a day on average. Posts focus on saving money but can also include things such as recipes, restaurant reviews, and garden tips. Member One plans topics two weeks in advance and writes content one weekout. In the event an unexpected cultural event occurs, the credit union can comment as well. (Remember the dress?).

WHITE + GOLD or BLACK + BLUE You tell us. #TheDress #whatcoloristhisdress #whiteandgold #blackandblue pic.twitter.com/oIrX9u9GBd

Member One FCU (@SaveThisBuyThat) February 27, 2015

Member One produces all of its content in-house; most of it comes from the credit unions marketing coordinator, Kim Kufel. The credit unions graphic designer, Sean Beaubien, stylizes and creates images. The marketing team meets monthly tobrainstorm ideas for content, taking into account credit union priorities, promotions, holidays, and special or local events. In March, Save This, Buy That included posts about St. Patricks Day, March Madness, and Easter.

Member One launched SaveThisBuyThat.com in August 2014. By January, according to Lilly, engagement across all channels increased 88% and followers jumped 100%. For example, Twitter followers grew 500%, from 300 to 1,500.

Lilly and the rest of the four-person marketing department expected 5,000 page views for the microsites first month. Traffic doubled expectations, reaching 11,000 page views.

Theres a great audience, and we want to reach them in a way thats not all about Member One, Lilly says. Its about them and their goals in life.

Reach Out And Touch Someone

On social media, consumers are trying to engage with family and friends, look at sports or news items, and share photographs of children or vacations. According to Todd Feldman, vice president of marketing at Virginia Credit Union ($2.6B, Richmond, VA), this is not the time to present a product offer.

CU QUICK FACTS

virginia Credit Union
data as of 12.31.14

• HQ: Richmond, VA
• ASSETS: $2.6B
• MEMBERS: 237,016
• BRANCHES: 16
• 12-MO SHARE GROWTH: 2.97%
• 12-MO LOAN GROWTH: 13.12%

Its a little bit out of context to try and sell out of social media because the behaviors of being in a buying mode and engaging with family and friends are different, he says.

Prior to joining the credit union in 2012, Feldman was the head of Circuit Citys social media program. During his tenure at the credit union, VACU has not tried to prove a return on investment from social media and instead has focused on translatinginformation into a deeper member relationship.

Can we take some learning we get from social media the comments we get on posts, the ratings we get on our Facebook page and see that were doing some things right? Feldman asks. From there, if we are doing thingsright, we should see some kind of positive return on our investment in our other marketing channels.

On Facebook, its primary platform, the credit union currently has a 4.4 star rating and nearly 13,300 likes which puts it among the 50 highest for all U.S. credit unions. More to the credit unions liking, according to the Financial Brands Power 100, a quarterly rating of the social media presence of banks and credit unions, VACU has the highest engagement rate for the fourth quarter 2014, at 80.24%. The listing calculates Facebookengagement by dividing the number of users talking about a brand by the number of likes the brand has. According to Feldman, VACU increased its Facebook likes by 42% year-over-year in 2014.

Facebook is a tool to engage with our members, Feldman says. Its not necessarily an acquisition channel; its more of a way we keep in touch with our members.

The credit union has one marketing employee who oversees the Facebook page as a part of a larger set of duties, though others in the department have input as well. VACU posts 3-4 times per week, says Feldman. On What Would Our Member Say Wednesday,VACU posts a picture of a credit union member with their personal testimonial. A random member who comments on this Facebook post wins $10 deposited into the account of their choosing. On Fun Friday, the credit union gives away anything,Feldman says, from an ice scraper to concert tickets.

Although posts dont have a sales-focused message, VACU does fold calls to action within the posts. Because it is prioritizing engagement over sales, the credit union doesnt expect Facebook to drive much traffic to its website. But accordingto Feldman, the actual numbers do show a fair amount of referral traffic from Facebook.

Its always kind of an eye raiser when we see it, Feldman says.

The Part-Time Social Media Expert

Commonwealth One Federal Credit Union ($316.0M, Alexandria, VA) has a three-member marketing department, says Suzie Cook, chief marketing officer. And withlimited resources, the credit union was not managing its social media channels to the degree it would have liked.

CU QUICK FACTS

Commonwealth one federal Credit Union
data as of 12.31.14

• HQ: Alexandria, VA
• ASSETS: $316.0B
• MEMBERS: 33,369
• BRANCHES: 7
• 12-MO SHARE GROWTH: -0.32%
• 12-MO LOAN GROWTH: 0.84%

Previously, the marketing team brainstormed potential postings at the beginning of every month and one employee would be responsible for the actual execution time permitting.

If other things came up there might not [have been] any postings, Cook says.

In December 2014, the credit union outsourced the management of its social media channels Facebook, Twitter, and LinkedIn to Canoe Media Services, a Northern Virginia-based social media services firm. Now, Canoes founder, Beth Lawton,works on the credit unions social media presence for 10 hours every week. In addition to Facebook and Twitter, the credit union asks her to write blogs about spending and saving money.

I was looking to get someone who had some journalism experience, Cook says.

She brings a fresh perspective to Commonwealth Ones marketing messages, Cook says, and pushes for greater clarity on what can be complex topics. She helps to improve SEO by optimizing meta- and alt-tags, analyzes Facebook Ad Buys and other socialtrends to determine the best way to promote content, and tracks online comments positive and negative. She also jump-started the credit unions LinkedIn page.

Most important, perhaps, she also changed the tone of the credit unions advertising. Now, posts feature engaging content members are more apt to read rather than sales-oriented messages, although the credit union hasnt totally eliminatedcalls to action in its messaging.

Our messaging now asks, How we can help you? Cook says. Articles and posts arent just saying, We have this great car loan rate.

According to Cook, there has been an uptick in non-employee Facebook users liking posts.

Not in large droves, she says. But some people are better than none, which it was before.

Such engagement suggests the new tone is more successful and underscores the value of this part-time employee. Cook declined to provide exact figures, but she did say the hiring cost was not prohibitive and the entire credit union was impressed with thesocial media managers work.

Nobody else can have her, Cook says.

The post How A Credit Union Can ARM Against Rate Risk appeared first on CreditUnions.com.

Mortgages are a major business that require heart and brains and sometimes a little courage. So this week, CreditUnions.com is showcasing credit unions that are pushing the envelope while building the bottom line.

According to a CFPB survey of mortgage borrowers, factors ranked as very important by survey respondents include reputation of the lender, recommendations from industry professionals or personal contacts, and past mortgage experience with the lender. These all underscore the importance of proving an outstanding borrower experience. With that in mind, writer Aaron Pugh offers tips on how credit unions can improve each phase of the mortgage process. Read more today.

In October 2009, total loan growth at Ventura County Credit Union was decreasing at a negative clip, its loan-to-share ratio lagged behind its asset-based peers, and its annualized loan originations and efficiency ratio were underwhelming for an institution of its size. That’s when the institution’s new CEO, Joseph Schroeder, challenged VCCU to retool the mortgage department. The credit union underwent a three-step transformation: It expanded its suite of mortgage loans, introduced and upgraded technology, and created a team of mortgage loan originators. To date, results have been tremendous. Learn more.

Interest rate risk is on the minds of credit unions everywhere. In Virginia, Pentagon Federal Credit Union arms itself against market volatility through its use of, well, ARMs. For the past seven years, PenFed has offered a 5/5 ARM and it recently added a 15/15 option. The 5/5 ARM accounted for more than 40% of the nearly $2 billion in first mortgages PenFed made in 2014, according to Craig Olson, the credit union’s senior vice president of mortgage operations. It’s a smart product for PenFed and its members. Learn why today.

After an F-4 tornado struck Tuscaloosa, AL, on April 27, 2011, residents where dazed and dismayed. The twister damaged or destroyed more than 5,000 housing units, including a large chunk of the city’s affordable housing inventory. Showing a dedication to the credit union-friendly concept of the double bottom line, Tuscaloosa Credit Union stepped up with a new program that empowers would-be homeowners and contributes to the rebuilding of the college town. For more on that and tips on to build a better double bottom line, read Tuscaloosa Innovates On Mortgages today.

In addition to our staff-contributed features, CreditUnions.com has a full lineup of Partner Perspectives that covers opportunities in data, TILA/RESPA changes, underwriting,millennial outreach, and member marketing.

There’s a lot to explore this week. Enjoy.

The post There’s No Place Like Home appeared first on CreditUnions.com.

I’m fond of saying if you walk out our front door and yell, three banks will hear you,’ says JB Hoyt, chairman of the Board of Directors at United Federal Credit Union ($1.3B, St. Joseph, MI). We have to be different,and member service is a key part of that.

Community Connections

The credit union partners with its largest select employee group, Whirlpool, and other local institutions to donate time and money to community projects.

Whirlpool sponsored the 100th Habitat For Humanity home for Benton Harbor [where Whirlpool is headquartered] and we sponsored home 101, says Gary Easterling, CEO of United.

To encourage both corporate and individual philanthropy, the credit union gives employees eight hours a year of paid volunteer work to use as they see fit, in whatever fields they see fit. Corporate commitment, employee activities, and word-of-mouth communicationhelps United establish its brand in the communities it serves. Where that leaves off, marketing materials pick up the torch and fan the flames.

United tends to spend more on traditional broadcast media in regions with lower brand recognition, says Tim Bennett, vice president of marketing. For example, the credit union launched a new TV commercial the first in a number of years and member referral campaign to maximize the impact of its branch presence in several new markets.

Organic growth remains a major area of opportunity for United, driven primarily by grassroots promotion of ancillary products and services by branch staff.

We have about 3.1 services per household, Bennett says.

Powerful Products

It takes a balanced blend of rigidity and flexibility to generate products and policies that serve individual needs without putting membership at risk. For United, that balance unlocks its true potential for organic growth.

To decide what stays the same in its own product mix, the credit union begins with identifying what works. We had phenomenal growth in loans last year, in the midst of a recession when no one was lending, Easterling says. It happenedbecause we stuck to our knitting and didn’t violate our underwriting standards, so we didn’t have baggage on our balance sheet.

BEST PRACTICES

Saying No to members is an important part of looking out for their financial well-being. Be prepared to follow up with an explanation of why a product or service isn’t a good fit and provide alternatives.

Layoffs within your SEGs or communities mean financial issues for everyone ahead. Make your battle plans early and physically get in front of members to address concerns before they become long-term problems.

That growth was not all rate-driven, as the credit union’s strategy is not all about a race for the best rate. We are constantly asking how [other institutions] are making it work with that rate? says Tim Gray, vice president of financeand accounting. In some cases they are [making it work] and in some cases, maybe they aren’t. But there’s a reason we stick with our underwriting standards. It’s good, sound businesses decisioning we work with.

Once it has locked down its must haves, United asks how it can make those products better.

Consumers’ needs evolve and you have to be willing to evolve with them, Easterling says. What worked two years ago isn’t going to work two years from now.

We run a 120-130% loan-to-share ratio, which scares the daylights out of some people, but we know how to do loans, says Mark Weber, vice president of national sales and service.

A key portion of this loan generation is United’s indirect lending program. Its delinquency is currently at par with direct lending at less than 1%, but it far exceeds direct lending in volume, Weber says.

When it comes to the real estate portfolio, the institution consistently ranks as one of the top players in its Michigan market. Nearly half of the mortgages in United’s portfolio are in Michigan, but the credit union also has mortgages in 36 otherstates and can service members’ mortgage needs anywhere in the country, says Jeff Leep, director of sales strategy and development for mortgages. As such, the credit union is becoming more top-of-mind in other regions, too.

In addition to the ARMs and fixed-rate products members most prefer, the credit union is seeking opportunities in niche and underserved areas of its newer marketplaces, including construction lending in Arkansas, where the industry was not as hard hitas elsewhere, and FHA and VA loans in areas that attract first-time homebuyers, Leep says.

We have about 4,000 mortgage loans and more than 65,000 households, Leep says. With national homeownership rates at about 65-66%, there’s an opportunity for us to expand within our existing membership, let alone membership fromthe regions we acquire.

The same potential for growth is true of cards, says electronic delivery systems manager Nada Kramp. The credit union currently has 23,000 credit cards accounts and 70,000 debit cards, with active usage at 83% and 80% respectively.

The 2006 merger of United Federal Credit Union and First Resource Federal Credit Union bumped up the card portfolio by nearly 50%. Acquisitions such as Clearstar Financial in 2009 brought mostly debit relationships, so the potential for growth in thesemarkets is strong.

Beyond the consumer side, the credit union is developing opportunities to become a stronger commercial lender in its markets, says Steve Downs, director of business services.

Although offering responsive business products such as business checking and ACH direct deposit is important, the main competitive advantage United has as a local lender is its ability to offer credit when banks can’t or won’t.

Credit is the life line for a company, for its growth and its operations. So I see business lending as one of our key products.

Credit is the life line for a company, for its growth and its operations, Downs says. So I see business lending as one of our key products.

When it comes to bolstering sales, United identifies needs before they arise and then gets in front of members. Many times, a sale comes about not because the member was aware they had a need but because the credit union presented an opportunity or solutionthe member wasn’t even thinking about.

If we know when your expiration date is for your insurance policy, we can send you information prior that shows our alternative and how it can save you money, Weber says. That’s how sales happen.

Online Options

Convenience is critical in United’s online suite because even the best products go unused unless they are easily accessible. To keep up with growth and demand, United is upgrading its website, phone service, and online banking suite to offer expandedoptions for bill pay, business banking, online account opening, and mobile banking, says Carly Eldridge, eCommerce manager.

The credit union moved from an extensive network of vendors who offered singular services to a small umbrella of more diverse providers. In doing so, the credit union hopes to create a seamless brand for its online experience.

We looked at spending levels and efficiency in our digital media and we’ve increased that percentage of our budget two or three times over in just one year, Bennett says. At some point, spending for digital media will probablyeclipse offline media.

Such investments are paying off. Since unveiling its redesigned website in April, United has increased the amount of time visitors stay on the site 40-50%. But it’s not just high-tech investments that are wowing members.

One product we weren’t sure would take off but worked out really well was text banking, Eldridge says. Members latched onto text banking because it was easy to type in a command and get basic account info, such as balances, it didn’trequire an expensive Smartphone, and it had minimal wait or loading times, she says.

Above And Beyond

United developed its budget counseling program, initially referred to as loss mitigation, to ensure that even when the credit union has to say no, it’s not the end of the member’s involvement.

We teach you how to manage your finances, we put you in a budget, and we work with you as your family adapts, Weber says. If you follow the program, we’ll be able to give you the loan you need.

And if a member can’t come to United, United is willing to go to them.

We have a factory in one of our markets laying off a bunch of people for the third time, Weber says. We’ll be sending budget counselors out to that market and have them work with those employees to help them with that transition.

You never know how going the extra mile with a member will pay off, whether it is a delinquent loan paid in full or a champion for your cause.

I got involved with United and the Board because they let me live in my house as long as I made the payments and were willing to take a risk on me, says Mike Hildebrand, vice chairman of the Board of Directors. It wasn’t just all about the almighty FICO score.

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