DB: All of our decisions are made locally; therefore we mirror the community and adapt our programs and policies to better serve the needs of the people who live in this area. That may mean more reasonable rates or providing financial education and management tools. Basically our approach is to price to absolute costs; we add in enough margin to cover improvements and then return margins in our loan rates. We also craft programs to help our members who may be struggling because of layoffs or economic setbacks to make their payments.
SCB: Are these programs unique to CCU or are they government sponsored?
DB: HAMP, the Home Affordable Modification Program is a federal project that we can use to help members avoid foreclosure. However, we are able to tailor our programs whether that is forbearance or adjusting rates and terms in order to help people on an individual basis. We have worked with families that were falling behind due to a job loss, and we were literally the first call they made to celebrate that they had landed a new job. That speaks for itself. Back when the School Board changed the pay schedule for teachers, we offered 0% interest bridge loans to help cover the gap.
SCB: This must be a challenging time for any financial institution.
DB: Like many banks we did a lot of home and equity credit loans. Property values were high and people wanted to pull capital out of these assets. Then the bubble burst and everyone is feeling it. In response, we revamped our underwriting process. We removed certain expenses and focused on our core values and processes. The idea was to make things more transparent, both for us as manag- ers and for our members. Helen Parish, one of my mentors when I was starting out in this business, used to say, “It’s not about making money, it is about serving our members; if you do that, the money will come.” That simple sage advice has played out for us as customer loyalty and customer referrals which continue to account for our stability and our growth.
SCB: What do you think will be the impact of the financial reform and consumer protection legislation?
DB: It is too early to tell. I applaud the intent of the legislation, because there were areas that needed more oversight. The dilemma we face is that with more regulations, there is more cost to comply with those regulations. Those costs have to come from somewhere.
SCB: What are some of these costs?
DB: Probably the most obvious example is the costs associated with digital money, debit and credit cards. The question is who is going to bear the cost of these conveniences? Fees help cover this gap while enabling us to keep other costs, for instance loan percent- ages, low. The costs don’t go away, they are simply shifted elsewhere. There is a cost distribution between the issuing companies like VISA or MasterCard, the financial institution that manages the card, the merchant and finally the consumer. Someone has to pay for this convenience and right now it is primarily the financial institution.
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