ATLANTIC CITY, N.J. — Brett Christensen, owner of CU Lending Advice, LLC, told New Jersey credit union executives and board members they need to own up to the financial problems in their own shops.
Credit unions should change their thinking that the economy is causing all their headaches and look inside their four walls to reveal the causes of their problems, he said. According to Christensen, credit unions are overly addicted to courtesy pay fee income. He suggested a better way to make money off members is relationship pricing based on member product usage.
Additionally, credit unions have high operating expenses. To help eliminate those, Christensen recommended the branch to asset ratio should be one per $100 million in assets and one employee per $6 million in assets. "The only people who need your branches are the ones dying every day!" he shouted. Christensen heavily pushed loans over the phone as an efficiency driver that maintained a personal element.
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Christensen was also not a fan of indirect lending, noting that it has brought down many CEOs and even entire credit unions. Credit unions also make a lot of poor underwriting decisions, our PUDs as he not-so-affectionately termed them. Common underwriting mistakes he called out include not recognizing bankruptcy risk, incorrect loan-to-value decisions, putting members in the wrong car and car loans, overly aggressive unsecured lending, and denying good loans.
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