BEAUMONT, Texas—Mobiloil FCU has turned around its operations over the past six years, and it is crediting three key drivers.
The CU, once struggling due to a large number of unprofitable members, now has ROA near 1.4%, is 100% loaned out, and averages 3.5 products per member. It said highly trained and motivated employees, better-than-peer operational efficiency, and a willingness to surrender margin to make products more attractive to members have all helped to turn things around.
All of that is good enough to land Mobiloil a Crystal Performance Award from Raddon Financial Group, which recognizes credit unions for achieving a Top 10 ranking within the company’s Performance Index, a balanced scorecard measurement of growth, income, efficiency and margin management. Mobiloil received an award for CUs above $500 million in assets,
“When I got here seven years ago we were not engaging our members well—they did not average many products and services with us,” said CEO Bob Hamer. “It became very clear we had to get more members using more of our products, pay attention to those who wanted to engage with us, and not worry about those who did not want to be part of the program.”
Bleeding Off Unprofitable Members
Hamer said that philosophy, backed by a decision to begin charging for inactive accounts and automatically switching members without e-statements to the electronic service, helped to slowly “bleed off” unprofitable members. Mobiloil had 40,000 members in 2009 and $250 million in assets. Today it has 44,000 members and $575 million in assets.
“This has worked out fine, we now have the members who want to be with us and use our services and are profitable,” said Hamer, noting the average accounts per member have risen from below two to 3.5, the highest among Mobiloil’s Raddon peer group, Hamer said.
Mobiloil, too, lowered loan rates and raised deposit rates, giving up margin to incent members to use more products.
“We have more than made up for the decline in margin because we are no longer servicing a lot of unprofitable accounts,” explained Hamer. “The typical credit union in the Raddon Index averages $88 in household income. We are at $190.”
The CU’s operational efficiency in the Raddon rankings is 62.4%, landing Mobiloil in the 95th percentile, a result attributable to employees knowing what they are doing and paying attention to goals, Hamer said.
“You just don’t need a lot of people to do this stuff and accomplish a lot if you keep things simple and stay focused. That is how we run the company,” said Hamer. “We run the company on a business plan. We hire good people that don’t necessarily have a financial services background. We spend a lot of money training them—training, training and retraining. We train on how to cross sell and on sales—sales as a service to our members. And we train in leadership and accountability—we want staff to hold each other accountable.
“All this comes down to how staff execute on their goals,” continued Hamer. “We build a strategic plan for the long term, build a business plan for the next year that ties into strategic plan, and then we roll in all aspects of the business plan all the way down to tellers and hold them accountable for accomplishing their goals,” said Hamer, asserting that many credit unions fail to stick to their business plan and “wander. It’s amazing what you can accomplish if you keep things simple and stay on track.”
Skilled In Cross-Sales
That attention to goals, and training, has staff highly skilled in cross selling, said Hamer. So much so that the CU is 100% loaned out.
“Our staff have become almost too good at cross selling loans that I think they have lost some of their skill in cross selling deposits, which we are now needing more of,” said Hamer. “I think we will have to retrain on deposit cross sales.”
In Raddon peer rankings, Mobiloil stands in the 87th percentile for cross selling new households.
“For anything you want to achieve, you have to have the patience and tenacity to stay with what you want to do,” said Hamer, admitting that can be difficult. “You have to realize it will take time and that results may be slow at first and will build. Here, we all knew where we were going, what we were doing, and that it would take some years to get things done.”