We asked Brett Jorgenson, chief lending officer at the $1.1 billion Gesa Credit Union in Richland, Wash., and last year’s Trailblazer Lending Officer of the Year, about loan portfolio growth tips for 2013.
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Credit Card Lending
If you have an active credit card portfolio, you should work on expanding your program to substantially increase the number of cards and balances outstanding. Credit card lending has been an ancillary service for many credit unions. Credit cards not only increase interest income, but also generate interchange revenue to help offset the decreased revenue from debit cards.
Two major ways to make these increases happen is with a rewards program and pre-approved cards associated with the approval of other loans. If you do not have a rewards program, you should implement one. While low rates and no-fees for balance transfers and cash advances are popular with members, they also want a competitive rewards program.
If your credit union is involved with an indirect lending program, offer pre-approvals for credit cards to your top tier indirect lending members and provide them a simple process to obtain the new card. The same applies to pre-approval letters with your closing documents on all first mortgage loans to members who don’t currently have your credit card.
And, we can’t forget about marketing. Marketing must have ongoing promotions to offer balance transfer campaigns and new card acquisition programs that are integrated with your credit bureau for pre-approval screenings (when possible). However, pre-approval screenings should also focus on lower credit tier members to provide them an opportunity to obtain a credit card. This group does not have an opportunity to receive credit card offerings from major financial institutions at an affordable rate.
Lastly, if you don’t have a program for first-time credit card applicants, you should work on developing one that allows them the opportunity to receive their first credit card and establish credit with your credit union.
If you have a business lending department, continue to expand it with deposit/merchant services. This allows you to offer a complete suite of products and services to obtain all of your members’ commercial services and accounts. If you can become their complete source for all things business, this will increase the chance you will get their future loans as well.
The key to success is employing and recruiting experienced staff that understands a wide variety of business loans and deposit services. Going further, you need to offer and develop traditional commercial and industry loans, but also operating lines, equipment loans and credit cards. Also, if you are not offering SBA loans, start. SBA loans provide the flexibility to assist many small businesses in getting started.
Indirect lending represents a significant part of many overall lending portfolios. If you do not have an indirect lending program, you should look at establishing one. However, staff your department with experienced lenders and establish the necessary controls to manage and monitor your program.
Indirect lending offers a credit union the ability to expand outside of your immediate market where you may have no branch presence to help diversify and reduce concentration risks in your local market. New vehicle sales will continue to increase in 2013, and with increased competition from other financial institutions, it is essential for you to provide your members the opportunity to obtain point-of-sale financing at the dealership.
It is also essential to develop an internal marketing program to cross-sell additional products and services to your new indirect members who have no other financial services or products with you. Along with the marketing program, develop an outbound sales team to follow up with new indirect members for approved credit card lines and additional cross-sell opportunities.