By Ray Birch
DES MOINES, Iowa—One credit union that has received a national award for performance contends the success and honors are about much more than just financial data.
The $149-million Affinity CU was recognized by NAFCU (now America’s Credit Unions) in 2023 as National Credit Union of the Year for those under $500 million in assets. Affinity credited winning the award to delivering on its mission and extensive community involvement as much as it credits decisions related to its bottom-line.
CEO Jeremy Smith told CUToday.info that investing in the community and improving members’ lives is a big focus of the organization. But allocating funds to do that well requires some tough decision-making.
“When it comes to things like the donations and giving back to our community, it's a delicate balance,” said Smith. “Trying to do all those right and also provide the best rates and products to your members, it’s a delicate balance. Without those community efforts we would be able to pay a little higher on interest rates.”
Adjusting Overdraft Pricing
That bottom line pressure has not prevented Affinity from lowering its overdraft charge to $15 from $25 in October of 2021, and now this year to $10. The CU tracks the savings that provides members via a running total on its homepage.
“Lowering that overdraft fee…is making a significant impact with our members. I think we have been really good at pulling the right levers over the years. That’s probably the best way to describe our success,” Smith said.
Affinity posted net income of $1.3 million, and $1.028 million through midyear, with its net worth ratio at 11.23%.
Credit to the Former CEO
“From our standpoint, a lot of this comes from my predecessor, (former CEO) Jim Dean. Under him Affinity just made the right decisions and we have continued that,” Smith said.
Jeremy Smith
Smith said the credit union has not let its “limited” resources hurt its financial results, pointing to many credit unions under $500 million in assets that have been merging out and citing the lack of resources/need for scale as primary reasons for giving up their charters.
“A lot of credit unions are saying it is not financially feasible for them to continue. However, we have always looked at that from a big-picture standpoint,” he said. “We were one of the first ones to win when the rate environment started to change. We started increasing our loan rates just to make sure that we are protecting ourselves and our members.”
Avoiding Liquidity Issues
As CUToday.info has extensively reported, as rates began to rise many credit unions delayed increasing their loan rates, particularly auto loan rates, a strategy that has proven to be unwise for many.
“When it comes to our deposit products, we've been very cognizant and aware of how the economy has changed, how it's shifted,” Smith said. “We've been trying to do a good job of staying ahead of that and not making moves later than what was needed and putting ourselves in positions where we're stuck, especially on the liquidity side. Our liquidity has been fantastic over this last year. We have had opportunities to invest in different things, to do more loans.”
Smith noted he has seen many credit unions book a large number of 30-year mortgages at very low rates.
“Now they're now stuck with them,” he said. “Their margins are shrinking, where our margins have increased steadily over the last year or more. Our net interest margin, because of the moves that we've made, has kept getting bigger.”
The Community Investment
Turning to its community involvement, Chief Marketing Office Kris Laufer emphasized Affinity’s actions are designed to support its mission statement.
“I think sometimes branding and marketing can be a lot of flash, and some credit unions may think that appeals to people,” he said. “But what they actually do might not back up what they say. When I submitted the application for Credit Union of the Year, I started it with our mission statement. That was changed in 2018 to ‘Building better lives.’ It's simple. And we have delivered on that. We have been building better lives in our community with our members.”
An Up-Close Success
Laufer said the Affinity CU has a long list of success stories from helped members it has helped, but none may be more impactful than the help it provided Jm Reasoner many years ago, helping him to turn around a difficult financial situation to make him become successful today—to the point where Reasoner is now a member of the Affinity board.
“Community outreach and involvement is something we've really focused on for quite some time, and we're consistent with it,” Laufer explained. “We're about to have our 30th consecutive year of a charity golf outing that annually raises about $25,000 for Big Brothers and Big Sisters of Central Iowa. Around the holidays each year we do our ‘Building Better Holidays’ campaign, where we donate anywhere between $10,000 to $24,000 to various organizations. We purchase television time on a local TV morning show where they can talk about our mission and spread awareness. We have scholarship programs that we award each year to local high schools, and we do even more than that.
‘Trying to Give Back’
“For our size credit union, the resources that we have to work with, and the amount of employees that we have, we’ve spent a tremendous amount of time volunteering and trying to give back to our community,” continued Laufer. “And I think that really resonated with our communities and builds strong relationships that translates into very good financial results.”