South Carolina: Palmetto State’s Credit Unions on the Move
After a tough spell, the signs now point north for South Carolina’s credit unions.
Manufacturing, particularly in the automotive and construction sector, has rebounded, and unemployment figures have declined significantly over the last year, providing some much-needed loan demand and positive revenue for the Palmetto State’s credit unions.
Statewide, South Carolina’s credit unions earned return on average assets of 87 basis points as of Dec. 31, 2012, slightly higher than the 86 basis points national average. Annualized loan growth of 4% as of 2012 year-end is slightly lower than the 4.6% national average. Membership growth as of Dec. 31 was also just slightly lower than peer, 2.1% versus 2.2% nationally.
That’s not bad for a state where unemployment peaked at 12% in November 2009 and that currently ranks 42th in the nation for median household income, according to the U.S. Census Bureau.
- SEE the NCUA state-by-state map and more Credit Union Times analysis.
One such credit union feeling the surge is the $64 million Greenville Heritage Credit Union in Greenville, S.C., where big employers like BMW’s auto assembly plant, Michelin and General Electric have helped spur a recovery.
“South Carolina was crushed by the recession,” said Alan Berry, CEO of Greenville Heritage. “But with manufacturing coming back, the economy is improving each day.”
Greenville Heritage’s ROA as of Dec. 31, 2012 is a very impressive 3.33% and Berry gives some of the credit to the consultation of Brett Christensen, owner of CU Lending Advice.
“We follow Brett Christiansen’s advice in that we reach out to CD-tiered members,” he said. “On top of that we’re as plain vanilla as you can get and you can see that it’s working for us.”
Greenville Heritage might be plain vanilla, but its annualized loan growth of 25.34% as of Dec. 31 is anything but.
“Like I said, banks are turning away folks who were hurt in the recession, people who are in the 660-680 (FICO score) range,” Berry said. “That leaves a huge part of the population that we are opening up our doors to and saying, ‘Come on in and give us a shot’.”
Delinquencies are low at 0.69% of total loans as of year-end. Pretty good, considering the credit union is targeting members with comparatively low FICO scores, and the state’s 8.4% unemployment rate, which while improved, still ranks 39th nationally.
“We don’t say yes to everyone who comes in for a loan, but we talk to the member and figure out if we can help them and do our very best to do just that,” Berry said. “I feel sad for some of these credit unions that are still struggling and don’t see that these people want to get back on their feet. We’re the ones who can help them while helping ourselves.”
“The state of South Carolina has followed closely the national trend in unemployment rates,” said Meredith H. Siemens, vice president of corporate communications for the $1.3 billion South Carolina FCU.
“However, there are significant disparities among the counties in South Carolina. The metropolitan areas have seen significant improvement in unemployment rate with rates being a full percent below the national average. This is in contrast to the rural areas which are still seeing double digit rate of unemployment. Additionally, the state has a very pro-business climate and has been successful in attracting new industry to our state,” Siemens said.
South Carolina FCU, located in North Charleston, reported ROAA of 0.58% as of Dec. 31 and a respectable 3.23% 12-month loan growth. Driving income was an 83.52% loan-to-share ratio, much higher than peer, and robust fee income of 2.64% of average assets. Delinquencies have also improved, down to 0.71% of total loans as of Dec. 31, compared to 1.51% just one year earlier.
“The credit union was able to achieve these results through the combined efforts of all employees to grow our loan portfolio and to focus on efficiencies within their areas in order to control our operating expenses,” Siemens said.
“Delinquency rates have continued to decline through solid underwriting, aggressive collections and an overall improving economy,” she said. “(Our) loss prevention department stresses early collection on all accounts and uses technology to be highly effective in reaching our members.”
South Carolina Federal’s positive numbers are reflected in the area it serves. The local unemployment rate is 6.9%, due to the fact that the Charleston area continues to benefit from strong tourism and through an active chamber of commerce, attracting new businesses to the area such as Boeing’s new 787 Dreamliner manufacturing facility.
“We have continued to focus on developing tighter and deeper relationships with our members,” Siemens said. “This past year we completely revamped our checking products to encourage our members to be fully engaged with the credit union. Based on these changes we are rewarding the members that have a strong relationship with higher certificate rates, lower loan rates and benefits such as reward points on their debit cards.”
But South Carolinians know that it’s going to take a lot more than jumbo jets to turn around their state’s economy.
A report, released Jan. 30 by the Corporation for Enterprise Development, points out that the 2013 Assets & Opportunities Scorecard shows that nearly 47% of the residents of this state lack adequate savings to cover basic expenses for just three months if they suffer a loss of stable income. Additionally, the report found that South Carolina ranks 48th overall for the financial stability of its residents.
This resonates with GHCU’s Berry.
“I know it’s not like it used to be, but if you do the right things, you’ll be rewarded,” he said. “We are actively seeking business and we are helping people who were kicked out of banks, doing a great job of serving them and for us it’s steady as she goes.”