Truliant FCU Members Waiting for the Recovery

The economy still has a long way to go to recovery, said more than 3,400 members of Truliant Federal Credit Union in a recent survey.

The $1.2 billion credit union asked members do they feel the economy is bouncing back. Twenty-three percent said yes and 23.5% said no. Nearly 54% felt the economy has "a long way to go." Truliant serves nearly 174,000 members.

"More than half of the respondents indicated that they feel the economy has a long way to go, which could be an indicator that some of our members might need a little extra help," said Marc Schaefer, president/CEO of Truliant in Winston-Salem, N.C.

By asking follow-up questions and diving deeper in to the data, Schaefer said the credit union can create products that help its members build their financial foundation. As an example, Truliant is rolling out a more detailed financial planning process for members in September.

MBLs on Pace, Shares Drive Savings Growth

Mirroring the pace for member business loans, total loans at credit unions are up 1% year to date.

Credit unions choosing to sell more first mortgages coupled with a weak economy are the two main drivers for the small increase, according to CUNA Mutual Group's September "Credit Union Trends Report." The 1% rise amounted to a $5.8 billion increase for all loans year to date and 3.5% or $19.7 billion over the past year.

The strongest gains have come from home equity loans, fixed-rate first mortgages and used car loans, according to the report. Adjustable-rate first mortgages, second mortgages and new car loans posted the largest declines. Member business loans are up just 1% year to date.

CUNA Mutual Chief Economist Dave Colby said looking forward to the rest of the year and into 2010, credit unions may continue to see a "sluggish loan growth trend."

"Consumers will be engaged in balance sheet repair until employment conditions improve," Colby noted in the report, adding strong first-mortgage origination activity will be strong, but credit unions will keep on selling loans due to historically low yields on long-term fixed-rate assets.

Meanwhile, savings growth continues to shatter records for credit unions, with much of the activity coming from regular shares not money market accounts and certificates of deposit.

The $67 billion gain in savings in the first seven months of 2009 is $21 billion or 47% above full year 2008 results, according to the report. Thirty-eight percent of the year to date increase is attributable to regular shares (0.65% yield), 32% from MMAs (0.95% yield) and 12% from CDs (2.03% average yield on one-year CDs).

Overall, 78% of the savings gain this year is attributable to low-cost liquid deposit accounts. This helps explain the drop in cost of funds from 2.44% at year end to 1.88% at midyear, Colby noted.

Branch Changes Come To Eastern Financial CU

Saturday hours will be cut at four branches belonging to Eastern Financial Florida Credit Union. This comes on the heels of closing an underutilized branch and relocating another.

Several of the branch changes were in place before the June merger of Miramar, Fla.-based Eastern Financial and the $3.3 billion Space Coast in Melbourne, Fla., said Space Coast spokeswoman Meredith Gibson. Eastern Financial's Lake Asbury branch closed on Sept. 4. The branch was acquired after the credit union merged in a small credit union in 2007, but it never grew beyond serving 200 members, Gibson explained. In another premerger move, Eastern Financial's Pembroke Pines branch will relocate to a larger facility with more amenities on Oct. 13.

After reviewing use patterns at four branches in Miami-Dade, Broward and Tampa locations, the decision was made to eliminate Saturday hours at all of them, effective Oct. 5, Gibson said.

While no other closures have been announced, "branches throughout the SCCU service area are continuously reviewed to ensure that they remain relevant to the members." With the closure of the Lake Asbury branch, Eastern Financial now has 29 branches.

CUSO Execs Share Startup Strategies

Three industry veterans arena will share strategies on what it takes to launch a CUSO.

"The CEO Report" will host an Oct. 27 audio conference on starting a CUSO. The panelists will include Gordon Dames, former president/CEO of Mountain America Credit Union, who helped create Member Business Lending LLC; Chris Langley, president/CEO of Eastern New York Federal Credit Union and managing partner of Syphr LLC, a newly launched lead generation CUSO; and Don Clark, senior vice president of Southwest Business Corp., who previously served as executive vice president at Mountain America and helped to design Member Business Lending.

The conference will include discussions on advice on staff expertise and how much to pay for it, details on proper CUSO capitalization, guidance on finding the right scale and making a CUSO profitable and specifics on the importance of finding a niche.

The conference is scheduled to take place 2:00 p.m.-3:00 p.m. ET on Oct. 27.

Cross Sells Disappoint

Attempts by banks and credit unions to cross sell investment and insurance products may not be yielding the results the financial institutions want.

That's according to a survey of 120 U.S. financial institutions by the Bank Insurance and Securities Association and Truebridge Financial Marketing. The data revealed that members and customers still do not realize that the institutions offer things like investments and insurance and most front-line employees do not produce enough referrals.

"In a financial institution, you can't turn the staff necessarily into salespeople," said Steve Ryerson, of UNFCU Financial Services, a subsidiary of the $2.8 billion United Nations Federal Credit Union, which has used Truebridge to boost its referrals through member education rather than a hard sell approach.

Cross selling is more important than ever as banks and credit unions present themselves as trusted partners for consumers bewildered by the financial crisis, according to the survey's data. Selling additional products to existing members and customers is less expensive than acquiring new ones, the respondents said. Five new appointments per week can add $160,000 in gross annual revenue. Citing a Grant Thornton survey, Truebridge said 80% of senior bank executives said they planned to increase cross selling efforts this year.

Commercial Rents Drop

Vacancy rates are holding steady in certain cites while most of the country continues to struggle with a decline in commercial rent, according to the Federal Reserve Board's latest Beige Book.

Based on information collected through Aug. 31, the rent on commercial properties has declined in Boston, Chicago, New York and Philadelphia. Vacancy rates held steady in Boston and Kansas City, and rates increased in Atlanta, Philadelphia, San Francisco, and Richmond, Va.

Rent concessions were reported in the San Francisco and Richmond markets with the latter noting that some landlords had postponed property improvements in an effort to conserve cash. Construction remained at very low levels, with modest improvements noted in public construction in the Chicago, Cleveland and Minneapolis districts.

According to the Fed, commercial and industrial lending declined in the Philadelphia and Kansas City regions but was steady in Richmond. The lack of available credit was cited as an issue for both residential and commercial contractors in Cleveland and for commercial real estate borrowers in Atlanta. San Francisco reported an increase in venture capital investment.

The deterioration of credit quality continues to be widespread with a few exceptions. Cleveland and Chicago reported some improvement while Philadelphia, Richmond, Dallas, and San Francisco continue to experience an erosion of credit quality.

The 12 Federal Reserve districts are Boston, New York, Philadelphia, Cleveland, Richmond, Va., Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.