Even as it absorbs its lumps and lays off employees from the slump in home lending, the $419 million Air Academy Federal Credit Union of Colorado Springs, Colo., made clear last week it is on a mission to emphasize online and electronic tools.
As part of a new growth strategy, the Colorado CU said also it is convinced the retail branch will play a lesser role in its future.
The CU with 40,000 members already closed four branches in the last two years and expects to consolidate two more perhaps next year, bringing its total facility footprint down to seven in El Paso and Douglas counties. The CU once had 13 northern Colorado offices. Its most recent closure was in August at Sand Creek.
Air Academy also acknowledged it took hits in its real estate portfolio earlier this year and as a result 19 employees were laid off two weeks ago and its mortgage operation reduced.
Based on a projected shrinkage of the refinance market, the CU said it let go 12 mortgage department employees, including staffers selling on commission as well as dismissing seven others, including a vice president all involved in branch and real estate support jobs. No further layoffs are planned, however, among a staff of 134, said officials.
While stressing the CU remains in sound financial condition, management has decided future growth lies in the “online sector and in electronics,” said Brad Barnes, chief financial officer.
“We are definitely seeing a greater acceptance of electronics–the smartphones, the remotes–and a migration from the branches so there is no need for all the back-office support required in the past,” explained Barnes. That would include staffing for ATM and general ledger balancing in the branches.
Regarding the losses, Barnes said his CU already took a “one-time $830,000 in write-downs on some land foreclosures, and we’ve already sold three pieces with gains,” so 2011 will produce a profit though the CU did report a $78,000 loss for the first nine months. Also figured into the third-quarter loss was the NCUA assessment of $886,000, he said.
Meanwhile, with mortgage rates climbing above 4%, the refinance market has started to slow and that trend should continue into 2012, he forecast. “Annual mortgage production which once was in the $200 million to $300 million range is now projected at only $90 million to $100 million for next year,” said Barnes.
With refinances making up about 70% to 80% of total Air Academy production, the slowdown has a large impact on the business, he said.
Underscoring its deemphasis on branches, Air Academy said its member statistics show that only 20% of members use branches once a month for three consecutive months.