Being a credit union of substance
I recently had a wonderful conversation with a friend about people we know who are of real substance – those people in our life who we admire and who have made a big difference in the lives of those around them. These people bring more than a set of ideas; they also have the character, skills, aptitude, wisdom, and know-how to make things happen. These remarkable people are change-makers, and they make the world a better place.
For me, this conversation correlated to the many credit union organizations and leaders I get to work with day in and day out, especially this time of year when our team helps dozens of credit unions through their planning meetings. I’m blessed to work with many organizations I consider credit unions of substance, organizations that – despite economic downturns or other environmental challenges – move ahead, learn, develop new muscles, inspire, lead, and engage the people and communities around them. They beat the odds and continue to attain remarkable results for their teams, both financially and for the communities they serve. Today we want to share one as a clear case-in-point.
Lewis Clark Credit Union – a credit union of substance
Trisha Baker and her senior team, Amanda, Chad, and Mary, lead LCCU. Spend a few minutes with any member of this team, and you’ll quickly learn how committed they are to their team, members, and community. It’s clear they are passionate about what they do and know exactly why they do it – it’s always people-focused. Their personality, character, and passion are substantive. This substance allows the team members to support each other, the credit union’s operations, and the many rural communities they serve.
Trisha and her team are experts at what they do. Of course, they are educated, trained, and seasoned by years of credit union experience. But besides being experts at daily operations, compliance, and transactions, they have carved out additional levels of expertise that give them an edge, even among large competitors. Focused on the credit union’s purpose of making their members’ lives better and improving the quality of life in their communities, this team has expanded its expertise to include financial counseling. As a result, nearly all of the credit union’s staff have become Certified Financial Counselors.
LCCU is a Low-Income Designated and CDFI-certified credit union. More than 50% of its members live in a low-income area, with more than 60% of borrowers who live in a low-income area or are considered low-income earners. LCCU went the extra mile to train its staff as Certified Financial Counselors to ensure each member interaction provides real-time quality financial advice, improving member service and supporting referrals and loan growth.
A second notable area of substance is in the credit union’s auto lending. Of course, LCCU participates in indirect lending like a majority of credit unions. However, what makes it stand out is its ability to consistently cross-sell balance sheet products to new indirect members. We all talk about it, but even best-practice large credit unions rarely reach or exceed 15% cross-sells on indirect, and these usually occur close to an area branch. LCCU is different. It serves a vast geographic area. It is not a large credit union; there is only a small team. But it’s a small team of people who know how to confidently connect with new members and find ways to expand the business they are doing with them. Their success rate is near 20% in cross-selling indirect.
Another area LCCU excels at is community development. This medium-sized credit union is a fixture in the local communities. Honestly, when I see the large rural area LCCU serves and the small size of its staff, I’m amazed that anyone has the time to be in the community with “boots on the ground” for so many events and causes. The culture of purpose they’ve developed increases the number of staff volunteers they get for each event.
I’ve just shared three of many areas where this team and organization have meaningful substance. But it’s enough to frame the outstanding results they continue to achieve. Trisha and her team are supported and inspired (yes, I said inspired) by their Board of Directors. These volunteers stick to governance and place a lot of trust in what the leadership team is doing. The Board believes in the purpose, and they are also people-focused.
Measurements of success
Having completed LCCU’s planning session last week, the team’s achievements and results are still fresh in my mind:
- The management team and Board are energized. This is noteworthy, especially during a pandemic that has many groups tired. This team is excited by the results they are having and can’t wait to move to the next level of growth.
- The leadership team is engaged and actively looking for the next opportunities. They are ready and eager to dive into the next initiative and area of growth.
- The Board is also engaged: the entire Board was part of the planning conversation and are forward-thinking and vision-focused. Their contributions guided the direction.
- Senior and mid-staff tenure. Front-line recruitment and retention have been a challenge, as with most credit unions. However, the LCCU team has been able to keep and inspire people in critical roles, enabling remarkable growth and financial results.
- At $180 million, LCCU is at the smaller end of their $100-$500 million peer group that includes 1,073 credit unions. LCCU operates five branches in rural northern Idaho and eastern Washington. LCCU has a community field of membership and a staff of 42 people.
- 2020 was a remarkable year, but these results are part of a trend.
- Key ratios:
- 2020 loan growth was 24.22% compared to peer at 3.71%. The three-year annual average is 18.1%.
- 2020 membership growth was 13.04% compared to peer at 0.79%. The three-year annual average hit 9.94%.
- 2020 ROA was 1.68% compared to peer at 0.52%. The three-year annual average is 1.30%.
- LCCU excels with a business model fueled by higher revenue from loan yield and fee income. The credit union’s expert risk-based lenders know how to generate the income needed to grow, innovate, and gain more substance that can be used for the greater good.
- Trisha would humbly tell you that they do have challenges, as we all do. But I submit, that this credit union has a higher level of substance, and it shows in its results and outcomes.
- In 2021, LCCU received its second CDFI grant for $1.8 million. It’s important to note that this grant funding is not part of the credit union’s phenomenal financial results in 2020. The award is recognition by the U.S. Treasury of LCCU’s deeper level of lending in its rural and low-income communities. To date, LCCU has received $2.5 million in grant awards for capital that has supported strong levels of growth.
- Community support goes well beyond the CDFI grant. In 2021, the credit union team presented another $30,000 check to the Children’s Miracle Network.
- Since 2014, LCCU staff have volunteered 5,780 hours within their communities.
- The list of community partners LCCU has collaborated with and financially supported is very long. But I can tell you LCCU has special brand recognition in each of its communities.
- Besides a passion for the community work they do, LCCU’s team’s secret sauce is that they know and understand the needs and challenges of the community. And this secret sauce flows over to the credit union’s fantastic membership rate of growth. They understand the needs and hopes of their members and potential members. They know what makes them tick, and they’re very good at responding to this knowledge.
Why it matters
The good news is there are many credit unions of substance that create awesome work cultures, meaningful and measurable impacts in the communities they serve and are consistently high financial performers.
As individuals and leaders of organizations, the limits of our ability to make a meaningful difference and leave a lasting impact will depend on the level of substance we can attract, develop and retain.