BY KIM MOORE
A conversation about credit unions with the CEOs of Advantis Credit Union and OSU Federal Credit Union, followed by June’s Powerlist.
BY KIM MOORE
CEO of Advantis Credit Union
OB: How has the economic recovery affected your lending strategy?
RC: After the downturn, consumer loan demand decreased. Now that the economy has recovered, we have seen the pent-up demand by consumers lead to a robust recovery in the auto-loan industry. Our auto portfolio increased by 71% last year. We also saw an increase in homeowner refinances, but that seems to be slowing a bit. With real estate values once again moving in a positive direction and with rates still relatively low, we have turned our focus toward the purchase market for mortgage loans.
OB: Are more businesses coming to you for loans because of the economic recovery?
RC: Yes. Our commercial-loan portfolio grew 41% last year. During the downturn, as commercial banks backed away from the market, we experienced an increase in demand for commercial lending and are still seeing robust activity. Predominantly, we are a commercial real estate lender; however, we are looking at additional opportunities to better serve the small-business community.
OB: How do you distinguish yourself from other financial institutions?
RC: Our biggest challenge isn’t differentiating from other credit unions — it’s simply creating awareness of credit unions in general. There is still an education gap as to what credit unions are and what services we provide. When we are trying to distinguish Advantis, we like to rely on the fact that we have served the Portland area for more than 85 years, are stable, are financially sound and are consistently rated as a best value for consumers.
OB: Why do you think there is not much public awareness of credit unions?
RC: Nationally, there have been efforts to increase public awareness of credit unions. However, we still have work to do. I think of how the “Got Milk?” campaign raised awareness of the benefits of milk, and I think the credit union industry could benefit from the same type of campaign. The overall message of credit unions formed as cooperatives and returning earnings to members in the form of lower fees and better interest rates is a positive one.
OB: Credit unions still represent a small section of the financial services sector. Do you see any potential for future growth?
RC: There is significant opportunity for growth, particularly as consumers are looking for other options and a better value after the financial crisis. However, the nature of our cooperative model puts a restriction on our growth. Credit unions must maintain appropriated levels of capital and can only increase capital through earnings. This restriction is both a plus and a minus, as it ensures financial stability but limits how quickly we can grow.
President and CEO of OSU Federal Credit Union
OB: What is the biggest challenge facing credit unions today?
RH: The biggest challenge facing credit unions, as well as all the financial services industry, is overregulation. When the Dodd-Frank Act passed, it was to address shortcomings in some of the large financial institutions, especially those over $10 billion. But now almost every regulation that comes out from that act is being considered best practice and is expected to be implemented by most financial institutions. We had plenty of regulations to address issues that arose; we just didn’t have regulators enforcing the regulations we had.
OB: Which of the new regulations are you finding it hardest to comply with?
RH: The biggest challenge is that the regulations are far reaching. The regulations hinder our ability to serve members. Credit unions were not the financial institutions that caused the financial crisis. We got caught up in the backwash. The regulations and best practices that have been implemented actually place restrictions upon how we can serve members, and they make it more costly for the member.
OB: How do the regulations place restrictions on your credit union and make it more costly?
RH: It places restrictions on what types of loans we can provide the members. We had to change the way we process loans and how we issued loans to members, even though our loans were not the ones that caused the financial crisis. We have to do certain things to comply with the new regulations that add cost to the member.
OB: Why do you think credit unions remain only a small share of the financial services industry?
RH: The financial services industry continues to become larger and larger. Right now credit unions have about $1 trillion in total assets. That is probably around 6% to 7% of the business for financial institutions. In Oregon, we have a bit more of the marketplace than the 6% or 7% nationwide. We have 15% to 16% of the marketplace. We were not created to be the primary force in the financial services industry. We were created to provide a choice and to stabilize the credit structure of the United States. We supplement and provide choice to consumers who feel they don’t have a choice in the financial services industry.
OB: How did the economic recession affect your business?
RH: We definitely saw an increase in deposits mostly because of a flight to safety. Credit unions were generally well capitalized and remained healthy during the financial downturn. Members also decided to pay down debt, and many of the members have tried to stay out of debt. We have seen recently a small increase in loan demand. We saw some foreclosures during the economic downturn. But now our delinquencies and charge-offs are under historic lows. Foreclosures remain constant. In Benton County, we are one of the largest writers of first mortgage loans, yet we see fewer than seven foreclosures a year.
|RANKED BY DECEMBER 31, 2012 SHARES & DEPOSITS|
|RANK||NAME||ADDRESS / PHONE||PRINCIPAL||SHARES & DEPOSITS /|
|MEMBERS / BRANCHES||FT EMPLOYEES|
|1||OnPoint Community||P.O. Box 3750 |
|Robert Stuart||$3.0B |
|2||Oregon Community||P.O. Box 77002 |
|Mandy Jones||$1.1B |
|3||Selco Community||P.O. Box 7487 |
|Bob Newcomb||$1.0B |