By Ray Birch
AUBURN HILLS, Mich.—One CU that won a national award for its business performance says it’s harder to stay on top today than it is to get there.
And the major reasons: The economic environment, as well as competition is getting tougher and it’s coming from “many new angles.”
As CUToday.info reported earlier, Genisys Credit Union received the Crystal Performance Award from Raddon Financial Group, a Fiserv Company. With more than 500 credit unions evaluated nationwide, the award places Genisys in the top 2%-3% of credit unions in the Raddon rankings.
“In looking back, I’ll say it’s been easier to get to success than it is to remain successful,” said CEO Jackie Buchanan, who has led $5.1-billion Genisys for the last 14 years. “With the big banks getting more into consumer lending and becoming more competitive, and then some of the non-bank competitors now in play…over the years, while I will never say it was easy to get here, it's been much harder to stay here.”
For example, Buchanan pointed out, the captive auto lenders are now working to take back market share in auto lending.
“That's not something they have done in the last four or five years. So, it's been more difficult for us to get loan production on our books,” she said.
‘Things Have Changed a Lot’
Threats are appearing from all sides, continued Buchanan.
“It's coming from the large banks, the non-bank competitors, and even some credit unions,” she said. “Like I said, the banks are getting more into the consumer business. I had a conversation with a CEO of a large bank in Michigan a couple of years ago and I asked how many auto loans do you do? And his response was, ‘As few as possible.’ They didn't want them back then and now this very same bank is going after them. Things have changed a lot.”
Genisys, which has won a Crystal Performance Award twice, was recognized for its strong performance metrics, including ROAA at 1.85% and capital at 16.31% according to Call Report data.
The Biggest Thing
“The biggest thing that drives our performance is our dedicated team. They work extremely hard to serve our members well and we have a very good members to employee ratio. Our efficiency ratio also stands out—basically how much money it takes to make a dollar. This year, the average billion-dollar credit union is at about 47 cents and we're at about 30 cents to make a dollar,” Buchanan said. “We've also negotiated some really good contracts with our long-term partners, who we appreciate very much. Buchanan believes it is that efficiency that played the key role in winning the Raddon honor.
“Our numbers have been very good for many years, consistently placing in the 99th to 100th percentile for efficiency. This along with our low operating expense allows us to give more back to our members,” she said. “This culminates into what Raddon calls a Membership Value Score or Member Giveback, and we place between the 95th and 100th percentile each year.”
No Silver Bullet
As sophisticated as credit union operations have become, Buchanan also credits simple hard work and focus for driving its strong performance.
“There really is no one silver bullet, it just takes hard work and constantly keeping your eye on the ball,” she said. “After the recession, as the economy improved, we saw many credit unions’ efficiency and operating expense ratios increase. We were very deliberate, and still are, in managing our members' money and in keeping our expenses in check. Over the years, we have also consciously been building our non-interest income, as well as diversifying our loan portfolio. Having a diversified loan portfolio has served us well in times where mortgages have ebbed and flowed, and now as auto loans are declining in our industry and as the captives take some of the market share back.”
The Biggest Mistake
Buchanan emphasized it is a mistake for any CU to take success for granted.
“You can’t slow down and you always need to be looking forward in an effort to be better tomorrow than you are today,” she said. “Our competition is ourselves. In addition, you must celebrate the wins and make sure to show appreciation to the team that works so hard to serve our members well—helping them reach their financial goals.”
That same type of appreciation must also be shown to the local communities the CU serves, Buchanan advised.
“A key for us has also been giving back to our communities. We sponsor, support or in some way give back by partnering with numerous organizations,” she said. “We support more than 1,400 events a year and our team volunteers over 5,000 hours. What you give to the community comes back to you tenfold in goodwill. People want to work with organizations that do good in the community. Also, giving our team opportunities to make a difference has helped to create a very positive culture.”
Learning from Mistakes
Buchanan acknowledged Genisys has not always made the right decisions and has learned from its mistakes.
“Not every venture, new product or partner you work with will be a home run,” she said. “It’s important to vet new partnerships carefully and try not to chase the shiny objects. Don’t believe everything you hear and give new initiatives you see in the market time to really show success before jumping in.”
The Raddon award will also help to guide the credit union in moving forward, the CEO said.
“Our partnership with Raddon has been key in our ability to look at ourselves honestly and to understand where we need to improve. It’s great to see where we rank positively against our peers, but it's more important to see what needs to change and where we can make a more positive impact,” she said. “I’m really proud of and cannot say enough about the team at Genisys Credit Union. Year after year, they deliver what our members want and need to live their best financial lives.”