NEWPORT NEWS, Va.—Following sweeping changes to its lending practices—including adding an 8% salary bonus incentive for staff—Langley FCU doubled its loan portfolio in the last two-and-a-half years.
Not only has the $2-billion CU grown its loan portfolio to $1.3 billion today, Callahan & Associates has ranked the CU in the Top 10 for loan growth in 2012, 2013 and 2014 among its peers.
To get those results Langley made several lending adjustments, including: creating a sales culture backed by stronger staff incentives, ramping up an already high-producing indirect auto program and streamlining lending operations to speed decisions and funding.
“When our CEO, Thomas Ryan, joined the credit union about three years ago we were not a sales-driven, lending credit union,” explained Michael McNabb, VP of consumer lending. “Outside of indirect auto lending, we struggled to put loans on the books.”
Sales Culture
McNabb said Langley drew up a plan to create a sales culture inside the credit union, and trained staff in cross-selling loans members need.
“We needed to do more reaching out to members, whether that be through advertising, new lending programs or staff just talking to people who visit our branches,” said McNabb.
When Langley Federal began its efforts it was only 40% loaned out, which McNabb said indicated Langley was not “doing its job” for members, considering the low investment rates the excess liquidity was receiving and borrowing needs of members not being met.
Training taught staff how to better listen to members to pick up on cues and life events that indicate the member could benefit from a loan.
Langley then beefed up its incentive program, adding an extra 8% annual salary bonus to staff when the credit union exceeds each of the five “stretch goals” established at the start of the year. This year those goals are target CU growth, active home banking account growth, loan growth, active checking growth and three-plus services per relationship.
“That 8% is a big bonus that staff work hard to achieve,” said McNabb. “It represents an extra two months of pay per year.”
Lending Streamlined
Langley also added a CRM tool and streamlined lending operations. The analytics tool, McNabb said, helps Langley better target loans, while operational changes removed a lot of unnecessary steps in lending processes across all loan types. Langley now has mobile and online platforms that allow members to apply for loans remotely.
“For example, three years ago a loan processor was averaging about 1.5 indirect loans an hour and now they average three,” said McNabb, who noted the CU is in the middle of adding a new loan origination system.
McNabb said the credit union did not make any significant loan pricing changes, but did revamp its checking line, eliminating legacy cards and adding a variable-rate card (7% APR), a rewards card, and a cash-back card.
The CU’s standard loan rates for the best credit, as of June 1: home equity (2.99% APR), auto (1.99%), and a 15-year fixed mortgage (2.99%).
Aggressive Promotion
Behind indirect auto lending, which generates approximately $40 million a month in loans, McNabb said credit cards represent the third-highest loan growth category. The latest data shows auto loans growing at 130.3% real estate 78.4% and cards at 51%.
Langley, too, has become more aggressive with advertising and promotions. McNabb said auto loan recapture programs, which offer a 50-basis-point reduction on Langley’s standard rate for bringing over a loan from another FI, have been the most successful.
“If you are going to sit at your desk and wait for someone to knock on your door for a loan, you will be waiting a long time,” said McNabb.