By Ed Speed
During my 30+ year credit union career I constantly heard the lament from many credit unions about the impossibility of getting loaned out. The excuses were myriad. The NCUA won’t let us make loans. The economy is bad. The auto dealers take our members. There is no demand. Excuses, excuses.
More often than not, the culture of the board of a particular credit union and the mindset of management are the substantive barriers to making loans to members.
Lots of credit unions have the desire to make loans, but many lack the single-minded focus and managerial courage to do so. The Danish philosopher, Søren Kierkegaard, wrote that a saint is a person who can “will the one thing.” Jack Palance’s character, Curly Washburn, in the film City Slickers told Billy Crystal’s character, Mitch, that the key to success is pursuing the “the one thing,” as you can enjoy here.
The Credit Union Act of 1934 states that the two purposes of a credit union are “. . . promoting thrift among its members and creating a source of credit for provident or productive purposes.” We are to be credit unions - not savings unions, transaction unions or CUSO unions.
I’m not a Rex Johnson groupie when it comes to lending training, but that has more do with style than substance. Rex’s energy level just plain wore me out. But Johnson preached and evangelized fundamental lending better than anyone I ever experienced on the horizon of credit union land.
What I remember about Rex’s remarks at CU conferences were three-fold. First, lending is not about processes; it’s first, foremost and always about people – specifically the members who need the loans and the CU employees doing the lending. Secondly, get to know your members really well and then make loans to the members you know. Thirdly, lending is really, really hard work and you can never take your eye off the ball. In a nutshell – Johnson taught that the foundation of effective lending is common sense.
Johnson believed “the one thing” that made for a great credit union was to lend, lend, lend to people who needed and appreciated their credit union. It takes training but no amount of training can help a credit union without the fierce will to make loans.
A credit union making lots of loans has an energized membership and an energized employee culture. When the entire credit union is “point loaded,” passionate about consumer loans and has clarity of purpose to focus on the credit part of being a “credit union” as their reason to exist, it is absolutely amazing to behold the transformation.
A Powerful Reminder
Nothing brought this home more powerfully for me than encounters with members after annual membership meetings.
Without fail, after every meeting, members would approach me to share with me their “when” stories.
It would usually be an older couple who wanted to chat a bit. He would say something like; “Mr. Speed, I’m Ben Thompson and this is my bride, Martha. (Couples married 50 years talk like that.) We just wanted to tell you how much our credit union means to us. When Martha was sick in 1972. . . “
Over the years I heard innumerable similar stories. “When our son got out of the service and needed a car . . . “ “When we had to go out on strike at the plant . . . “ “When we wanted a new home . . .”
No one ever said, “When I used that new ATM machine . . . “ “Woo, doggie, that new item processing system you installed sure saved my bacon!” “Boy, oh boy, I don’t know what we would have if you hadn’t come up with that monthly new statement format.”
All of the when stores were personal and powerful – and they were always about provident credit for people of modest means; salt-of-the-earth people who needed and deeply appreciated their cooperative financial institution. Some stories were poignant; some were inspiring. All made me deeply grateful that I could have a career in a credit union, and one with a board and a superior employee team that could “will the one thing” – loans.
The team of young professionals who joined me in 2003 and 2004 took only three years to go from 60% loaned out to 110% loaned out – and have never dropped below 100% loan-to-share since then. For them loans were not just one financial services product among many to be offered; loans were the very essence of why the CU existed. They could will the one thing.
Edward Speed retired in 2012 as the CEO of a $2.1 Billion credit union, and can be reached at firstname.lastname@example.org.