By Ray Birch
MIDLAND, Mich.—While credit unions have paid a lot of attention to those members who've been hit hard by the economy, one credit union said it has also not ignored those who have done well—and that has helped to drive 15% loan growth during the pandemic.
The $2-billion Dow Chemical Employees’ Credit Union funded more than $360 million in new loans for its members in 2020—a 15% increase from 2019.
What is noteworthy about the volume, DCECU said, is it hit those numbers even though all of its lending activities were conducted online or by telephone for approximately three-quarters of last year.
CEO Michael Goad said DCECU quickly realized that while the pandemic was exacting a tough toll on a portion of its members—to whom it has offered assistance–many segments of the economy were performing just fine.
“Parts of the economy were still chugging along,” said Goad. “Initially, I thought this whole economy was going to tank—take a huge hit. But that did not happen. The good news is there was still pretty much of our membership that was intact. We understood we had to turn our attention and resources to supporting that part of the economy which had not been hurt so badly.”
Earlier Adjustments
The credit union, however, would not have been able to serve those members who’s bottom lines remained strong without having made adjustments to the CU’s lending capabilities well before the health crisis hit the U.S.
“The investment made by the IT and lending team in upgrading our digital lending capabilities in recent years was probably the biggest thing that led to our loan growth last year,” explained Goad. “When all this happened in March (2020) we were ready to pivot to remote lending and really not feel any additional friction. We just flipped the switch. We were able to seamlessly keep originating loans with digital underwriting, digital processing and digital funding—fully automated.”
Goad said DCECU had to occasionally revert to the “old fashioned” lending approach last year.
“We had to make a few concessions for members where somebody needed to deal with paper,” he said. “But all other loans, except for literally a handful, since March 2020 have been handled through the phone or over the Internet.”
Simultaneous Concerns
Yet, the pandemic, Goad reminded, was unlike anything credit unions had previously experienced, and that led to concerns throughout the organization.
Michael Goad
“We had to deal with a couple things simultaneously,” recalled Goad. “Number one, I have a motto here that we cannot take care of our members unless we first take care of our own people. So, we immediately began addressing staff safety, their family responsibilities and the challenges of remote work. We knew, of course, that during the pandemic our members still had borrowing needs and still had to address life events. We wanted to make sure we captured all of that.
“As we moved everyone to remote work, we were able to use a software application that we already had, change some settings for our internal calls and send those calls out over the Internet to our staff as they worked from home. They were able to answer calls over their computers. That kept our member service virtually unchanged, which helped with lending.”
Auto lending, especially indirect, as well as mortgages performed well last year, said Goad. And, the fact the credit union is tied to a sponsor company that performed well, Dow Chemical Co., helped keep business strong.
Strong Sponsor
“We are not just limited to Dow,” explained Goad. “We have more than 75 select employee groups. But Dow’s strength has certainly been a benefit for us during the pandemic. Their employees, retirees and family members make up the bulk of our membership, and Dow has been strong during this economic downturn. We have only $1 million out of $1 billion in outstanding loans that are in some form of deferral now, which speaks a lot to the strength of our primary sponsor.”
It was a very good year for DCECU, which, like many other credit unions across the nation, has suffered markedly fewer loan losses than expected. In fact, it was able to hand back $15.57 million in 2020 through its annual Member Giveback, which is an annual tradition, as CUToday.info reported here https://www.cutoday.info/THE-feature/It-s-About-Getting-it-Right-the-First-Time
One Important Lesson
According to the CEO, one important lesson the credit union learned during the pandemic that will stay with the organization moving forward is the importance of strong communication with members, especially when times are tough.
“Our digital outreach to members during the last year--we have made extra efforts here,” said Goad. “We kept them updated on our operations, products and services, and special assistance offers from the start of the health crisis, and that made a big impact with them.”