By Ray Birch
LONGVIEW, Wash.—One small credit union is reporting that in just a year it has been able to go from a shrinking loan portfolio to 13% loan growth, while boosting stagnant membership growth to gains of nearly 7%. And it has done so by blowing up boxes, both literally and figuratively.
Even more impressive, the $23.6-millon Mint Valley FCU has done all that during the pandemic. Its strategy? It has increased its focus on its underserved membership, especially those with credit scores well below the state average.
CEO Dori Harvel said the secret to Mint Valley’s success is not hard for other small credit unions to emulate, but it does require taking on an obstacle that can be difficult for some.
“We just made the decision to do effective marketing by hiring the expertise to get that done,” said Harvel. “And we made the decision that we had to spend money if we were going to grow.”
Harvel said too many small credit unions—including her organization for so many years—focus too much on building a big capital reserve to survive tough times. But while the thinking is prudent, it also gets in the way of a small credit union’s growth and especially its long-term survival, she said. Mint Valley reported net worth of 15.93% at the end of the first quarter.
“I’ve been at Mint Valley for 24 years,” said Harvel, who took over as CEO in 2014. “The focus from prior management was on our capital. We needed to hang onto it. That's our savings and we need to keep expenses as low as possible. That's kind of what I have grown up with here, and our board had that same thinking.”
Making a Break
While it was not easy to do, Harvel said that in early 2020 she finally made the decision to change not only the credit union’s approach, but also her own mindset.
“It’s very easy to get caught up in the thinking that we keep things the same because that is what we have always done,” said Harvel. “You get comfortable with that. But I knew we would not grow if we did not change how we approached the business. I admit it made me uncomfortable making the changes. I had gotten used to doing the same things.”
Dori Harvel
Harvel said she believes changing that way of conservative thinking is the biggest object in the way of many small credit unions’ futures. But she was able to convince the Mint Valley board to spend money to hire a marketing company, in this case South Carolina-based Your Marketing Co., and to upgrade also some of its back-end systems to better support digital delivery.
Harvel said the objective of the marketing efforts was to get closer to its members and engage with them.
‘Do Something Different’
“When I first spoke with (Your Marketing Co. CEO) Bo McDonald I told him we have to do something. I said we've been in this town since 1936 and still we're the smallest credit union and nobody knows who we are,” recalled Harvel. “I said …we're doing we have to change and do something different.”
The CEO understood the seven-employee credit union did not have the marketing expertise it needed.
“I told Bo we're willing to change and do just about anything we need to do,” she said.
That change began with a social media campaign and billboard advertising. Mint Valley even created a video in which featured an employee dynamiting some boxes, saying the organization does not like to put people in boxes and looks for ways to help out each individual.
The credit union also offered a $150 prize to encourage members to film a video of themselves and sharing their story.
Targeting the new demographic has required additional financial education and member hand holding, but it has also been the primary driver of the member and loan growth, Harvel explained.
About The Community
Mint Valley, which is community chartered, serves a population of approximately 115,000 where the median household income is approximately $54,000. That contrasts greatly with the state’s median of nearly $74,000; the U.S. average is $69,000, Harvel said.
“The average credit score in Washington State is 730 and nationwide it’s 711,” she said. “But for Cowlitz County, the average credit score is just 632. These folks truly require financial handholding and assistance to find a better path to financial stability and wellness.”
Forty-one percent of the credit union’s loan portfolio is comprised of members with a credit score of 639 or less.
“All of this, it’s not rocket science, just people helping people and trying to give everyone a chance,” she said. “And it’s also being willing to change how we’ve always done things.”