A World of Opportunity

Bill Vogeney
June 14, 2010 | COMMENTS

As a member of the executive committee of your lending council, I'm well-aware of the challenges many of you are facing in your credit unions. The credit union movement is experiencing:

• Historically high unemployment rates (the highest in 60 years).
• Unprecedented declines in real estate (well, parts of the country like California, Florida and the Northeast have experienced significant declines in the past, but humor me here).
• A typical consumer so heavily indebted that the lending industry is seeing a decline in total consumer debt for the first time in over 50 years.

Because of these challenges, there is a tremendous need in the credit union industry. That need just happens to be senior level lending executives with a unique set of skills. If you're looking to move up in the industry; from lending manager to VP, or from a smaller credit union to a much larger organization, it's no longer sufficient just to have good lending skills. There are a lot of people who know how to make a good loan. Management and administrative skills are often thought to be a given, so it's hard to stand out from the crowd based on those qualities.

To be specific, the credit union movement is lacking candidates for top-level lending positions at larger credit unions who possess two skills:

• The ability to think strategically. The industry is flooded with competitors, all looking for a share of our member's wallets. We can't always compete on price , and there are competitors who will make the process easier and faster. How can we compete? That's a question to be answered by a senior lender who can develop a unique strategy based on the competitive marketplace and their vision of the future.
• Analytical ability. When I talk about analytical ability, it's more than just analyzing a credit bureau score or a borrower's ability to pay. It's the ability to understand the risk impact of increasing (or decreasing) your maximum LTV on an auto loan. It's the understanding that collection costs have to be built into your risk-based pricing program. It's the ability to accurately assess the impact on your allowance for loan losses from taking more credit risk (hint, it's a factor of higher losses and loan growth).

Let me tell you a couple of stories; I love telling stories. Ten years ago I applied for the Senior VP of Lending at a credit union in excess of $2 billion. I won't disclose their exact size to protect their confidentiality. During the application process, I had the recruiting firm tell me their most difficult executive search was the VP of Lending position. The difficulty was due to the fact most of the candidates they had for these openings did not have the analytical ability that credit unions were seeking. They may have had a bachelor's degree, but certainly didn't have a master's degree in business. Many candidates didn't have a strong grasp on the financials, including ALM. The second half of the story goes like this: I spent some time in analyzing the credit union. They had a good financial position, but I really hated their business model. They were very reliant on one particular loan strategy. They didn't have a well-balanced portfolio, and from what I learned about the credit union, I wasn't sure the senior management had much interest in diversifying their balance sheet. I eventually withdrew from consideration at a time when I was one of the final three candidates.

Story two comes from a phone call I received a few weeks ago. I spoke with a different recruiter who had been trying to help a large CU fill a VP of Lending position. The search has taken over a year, for a variety of reasons. The biggest reason for the delay was the lack of candidates with the financial analysis skills desired and needed by the credit union.

I made two decisions between 1995 and 2001 that forever changed my future. First of all, I decided to go back and get my masters degree in 1995. When I was an undergrad, I always thought to myself, “How am I ever going to use what I'm learning in Finance and Economics?” As a part-time graduate student in an Executive MBA program, almost every weekend in class I realized there were real-life applications for the concepts I was learning. My second big decision was to change jobs in 2001. Even though I bowed out of that search in late 2000, I moved across the country to Ent FCU in Colorado Springs in 2001. Even though I had been revitalized by earning my MBA, within a few years I had grown stale. I thought I knew everything I needed in order to perform my duties. All it took was a job change to realize I didn't know it all. And nine years later, I'm still learning and my credit union reaps the benefits.

The VP of Lending position isn't going to get any easier over the next ten years.

• Expect competition for our best borrowers to be stronger than ever.
• The jobs lost in the U.S. economy over the last two years won't be coming back quickly. I recently heard that it may take until 2015 to reach a “normal” level of unemployment of 6.5%.
• Real Estate may never be thought of again as the “no-lose” investment, making mortgage and home equity lending very dependent on superior risk management.

Whether you intend to be a “lifer” at your credit union, or you aspire to greater opportunities, now is the time to take charge of your future and build the skills the credit union industry needs from the Lending VP position. How can you do this? Here are a few that come to mind:

• Go to a conference you've never before attended. I went to a sub-prime mortgage conference in early 2006 to find out what was going on in the industry. What I heard caused me to return to the office and immediately start analyzing the impact of the future collapse of that industry.
• Build a strong relationship with your CFO. A senior lender who can think like a CFO has extremely marketable job skills. I've been lucky to work with a couple of great CFOs who have helped me on critical issues like pricing and ALM.
• Go back to school. Even if you take one class at a time, you can learn something valuable for you and your credit union. A former employee of mine just recently completed her bachelor's degree after a decade of classes, trying to balance work, family, and her educational goals. She still has 20 years left to build her career.

Bill Vogeney is Secretary/Treasurer of the CUNA Lending Council and Senior VP/Chief Lending Officer at Ent FCU in Colorado Springs, CO.