Superior Lenders Provide Insights on Double-Digit Loan Growth During the Great Recession

Michelle Larson

Rick Uhlmann

ACUC Audience Learns How Direct and Indirect Lending Drive Consumer Lending Success

SAN DIEGO – Just 24 credit unions more than $50 million in assets grew their consumer loan programs by 5 percent or more from 2008-2010. Three of those credit unions shared how they managed to not only survive, but thrive during the great recession during a Discovery breakout session Wednesday at the America’s Credit Union Conference.  The session was facilitated by Patrick McElhenie, sales planner at CUNA Mutual Group.

“These three credit unions have been able to achieve amazing loan growth during the worst economic conditions in recent history,” said McElhenie. “The average consumer loan growth of our three panelists was 12 percent over the last four years. Most credit unions would have been happy with half of that.”

“Eat your vegetables!” suggested Garth Strand, CEO of Hutchinson Credit Union, a $179 million-asset credit union in Hutchinson, Kan. “It’s not flashy, but you have to continuously focus on the basics of being competitive, speedy, accurate, polite, confidential and following through to even be in the game.”

Strand also shared the credit union’s No No’s policy. The financial services representatives are able to approve loans, but any loan denials must come from the central underwriting department. “We don’t say no until we have done everything we can do to say yes,” said Strand.

Despite the success other credit unions have found in indirect lending, Strand doesn’t rely on it heavily. Only about 7 percent of consumer loan volume comes in through indirect channels. They have not been able to find a philosophical match with a dealer that is good for members, the credit union and the dealer.

By contrast, Scott Credit Union, a $794 million-asset credit union in Collinsville, Ill., has seen huge growth in indirect lending since 2007.  “There are no silver bullets with indirect lending,” said Steve Stryker, chief operating officer.  “We have engineered our program for the long haul by focusing on dealer communication and response times.”

As a result, their dealer network has expanded from 70 to more than 200 in the last five years. They have implemented numerous changes including:

  • Adding an electronic conduit to improve dealer communication
  • Implementing an instant decision matrix and a centralized underwriting department to speed response time
  • Streamlining Internet loan application
  • Adding a dealer representative to manage the dealer relationship

They have also expanded their incentive program for frontline staff, which is driven by the non-interest income generated on direct consumer loans. As a result, earnings on non-interest income grew from $30,000 in 2007 to $500,000 in 2011.

Joe Rossa, senior vice president of EECU in Fort Worth, Texas has also found success in indirect lending by moving from a third party to an in-house program.  “The key to indirect lending is hiring the right people and developing a relationship with dealers you can trust,” Rossa said. The auto loan portfolio of the $1.3 billion credit union has grown from $275 million in 2007 to $640 million in 2011.

Another key component of their success in auto loans came from implementing a “We Are One” philosophy. To avoid competing against the very dealers they are trying to build and expand their relationship with, the credit union issues preapproval certificates to members with the same rates and terms whether they close the loan at the dealer or the credit union.

“We want our members back, so we allow them to finance their car in a way that is most convenient for them,” Rossa said. The branch still gets credit toward their goals and incentives for the application and preapproval so staff members are not selling against the dealer.

The three panelists were part of the Filene Research Institute’s report “Superior Consumer Lenders During the Great Recession,” which was sponsored by CUNA Mutual Group in September 2011.

CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s Web site at

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wisconsin.

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