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Centralized Lending

CUNA Southeast Management School White Paper Presentation.

Bruce Ulrich

on 10 June 2013

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Transcript of Centralized Lending

"It is in the best interest of a credit union to utilize centralized lending instead of local branch lending." Centralized Lending Operational Efficiency Member Experience Consistent Practices Centralized lending creates operational efficiency in many ways. A more efficient credit union is a more profitable credit union. Here are some details... Net Income -correctly structure member's debt Centralized Lending a study 3 Areas of Focus -single point of contact for the member -allows for building rapport in the branches Are you in the right spot? -are you a superstar seller? -are you efficient? -what is your risk tolerance? Compensation Checks & Balances -processors/underwriters at top of pay range -ever called underwriter to fight for loan? -become consumer advocates -deepen relationships Stable Underwriting
Risk Assessment Go Green
Baby The Down Side -"I want face to face!" -application doesn't always reflect member DENIED! -job satisfaction -slower turnaround Size matters Leslie Vincent
President & CEO
Members Choice CU Presenters Bruce A. Ulrich
Marketing Director
Statewide FCU "Just because we are 'nonprofit' entities, does not mean that we cannot make a profit. In fact, we must." "The sum of all experiences a person has with a supplier of goods and/or services, over the duration of their relationship." Money! Money! Money! -pay employees -keep lights on -marketing and advertising Employees -most valuable asset -greatest expense Interest Income -main source Where does our money come from? -non interest income -fees -other operating income -fund loans -additional services Centralized lending: where all loans are filtered through a central lending department/location so as to take advantage of economies of scale. A hub/spoke of sorts, where each spoke or branch funnels loan decisioning to the hub, increasing efficiency greatly and decreasing expenses. Economic Trends in US Fed Funds Rate at 0-25bps growth of consumer credit automobile sales Home Price Index 2012 CU Performance membership increase share & share draft balance loan origination Size Categories large medium small increased revenue + lower expenses = greater net income greater net income = better deposit and loan rates for members more business = stronger capital position = healthy, happy credit union members How-to: retain high-value employees? train them effectively? CASE STUDY SEMC Credit Union Previously 4 branches minimal growth 2012 17% increase loan portfolio 87% loan-to-share ratio 7.6% avg loan yield 1.3% Delinquincy discovery awareness attraction interaction purchase use advocacy cultivation A person's mind makes thousands of decisions about a company with which they do business - Factors -consistency -value -speed Relationship Departure Negative Experience -can spread at a rate much faster than your PR Dept can control -courtesy -personalized -only so much "spin" can correct TRADITIONAL LENDING - from - present past borrower lender Decisions: 2x speed streamline tasks decrease mistakes same employee Advocate member encouraged fight for them feel they're getting
a better deal perceived value "Credit unions put massive emphasis on emotional elements like consumer trust and personal touch in the member interaction rather than on consistently getting the basics right..." "...To fail at the functional side of this transaction, however pleasant the person was in helping the member, is detrimental to the overall member experience." Filene Research Fellow Dorian Stone @Brudaddy That presentation
was very informative. What if I have questions? TWITTER 95% of all loans
closed electronically
Full transcript