[00:00] John Anderson: It’s probably something most folks would rather not be troubled with the, the, you know, shopping for a new rate. Um, I think that’s, that’s really the genesis behind the partnership. We, we, we don’t know when members are out there shopping rates. Um, they’re, they’re going to the lending trees and the Credit Karmas of the world, and, and all of a sudden, they’re getting inundated with offers that they didn’t ask for.

[00:25] Narrator: Welcome to 22 Minutes in Lending your Go-to podcast for insights on all things lending from lending practices, regulatory updates, how to enhance lending efforts and more. In each episode, Vince Passione connects with industry leaders to discuss the latest trends and happenings around the lending industry. Let’s dive in to the latest in lending.

[00:49] Vince Passione: Welcome to 22 Minutes in Lending. I’m your host, Vince Passione, and today we’re joined by John Anderson, the Chief Lending Officer of Atlanta Postal Credit Union. John’s been in the financial services industry for over 20 years with leadership roles at SunTrust and PNC before stepping into the credit union world. Since joining Atlanta Postal in 2021, he quickly made his mark moving from a VP of consumer lending, the chief lending officer in just about a year. Let’s see what John’s been up to. John, welcome to the podcast.

[01:15] John Anderson: Absolutely. Thanks so much for having me, Vince.

[01:16] Vince Passione: Awesome. So John, why don’t you just go over a little bit about the credit union asset size membership base, and just some of the speeds and feeds, cost of funds, loan to share ratios.

[01:26] John Anderson: Yeah, yeah. We’re, uh, headquartered here in Atlanta, Georgia, uh, coming to you live from our brand new headquarters right outside the airport. So apologize if you hear the planes in the background.

[01:35] Vince Passione: Congrats on the new move.

[01:37] John Anderson: Thank you. Thank you. Uh, I look forward to showing you around. Uh, we’re about two and a half billion in assets. Uh, always had a nationwide footprint, primarily postal. Um, here as of late, we, we did start a secondary brand called Center Park. Uh, the PARC is a, a bit of a play on the word parcel, just a, a nod to our roots. Um, but that, that’s our community oriented brand. Um, so we, uh, had impeccable timing launching that right in the middle of COVID. But, uh, here in the past couple of years, it’s really picked up steam and, uh, loan to share. We, we try to hover in the mid eighties. Uh, historically we’ve been a pretty conservative credit union, so, uh, we don’t like that to get too high. Um, cost of funds, <laugh>, we’ve been gen generous payers to our members, you know, historically. So we still try to be, um, you know, near the top of the market, not, not the absolute highest, but, uh, always, always prefer to pay our members before going out and sourcing other funds. Mm-hmm <affirmative>.

[02:35] Vince Passione: John loan to share ratio today, the credit union industry is roughly about 81%. It’s down a little bit as of the Q1 reports. Where, where are you from a loan to share perspective?

[02:44] John Anderson: I think we’re in the mid eighties. We, we try to stay right around there. It’s, there’s such good picking out there. We feel like right now interest rates are, uh, steady but higher than we’ve seen in, in quite some time. So any chance to deploy right now, we’re taking advantage of it.

[03:00] Vince Passione: Yeah. And cost of funds in the industry seems to have come down a little bit. It was, it, it seemed to spike closer to 200. Now it looks like it’s in that 180 range. You sort of at the same that industry norm.

[03:10] John Anderson: Yeah, yeah, we’ve seen that. Our cost of funds, it, it probably peaked maybe 12 months ago. So this past, uh, well, the first half of this year, we’ve definitely seen a, a relaxing of that, which is nice. Um, less competitive pressures, board members bringing money back to us, so a welcome sign for sure.

[03:27] Vince Passione: Now, John, you mentioned Cena Park, um, so it’s a different brand. What, what was the focus of creating well, the, what was the objective of creating that separate brand from Atlanta Postal?

[03:38] John Anderson: Yeah, we, we got a lot of feedback from our community branches that, um, you know, if you didn’t have an Atlanta address or you weren’t part of the postal service, that that just, you know, a hurdle that any credit union faces when you start venturing away from your primary segment. So that, that was the idea behind Center Park. We quickly learned that having two brands was less than ideal. Like, you know, printing two of everything, the costs and the confusion, two different websites, you know, the work. So I guess it’s been about a year or two now. We, we decided to co-brand, so we’re officially a PCU slash center park now. Um, and it just gone to market that way. It’s, it’s been, it’s helped. I think, um, we, we still have to do some explaining to members about what those two different brands are, but, uh, I think we just, we wanted to give a nod to the community that felt like they may not fit under our former name.

[04:29] Vince Passione: And now what’s the long-term strategy, though? I mean, you were, you’re about a hundred thousand members, I think, looking at your 5,300 reports, is that right?

[04:37] John Anderson: Yeah, we’re, we’re, well, well over that I believe now. Um, I think going forward, we’re, we’re actually coming upon our hundredth year anniversary this year, uh, congrats in November. Congrats. Yes. Thank you. We’re playing a big celebration, but I think strategically that’ll be a, a point of discussion, you know, what, what does it look like going forward? I don’t know that dual branding was in the cards or, or it will be there forever. So more to come stay tuned as we hash that out.

[05:02] Vince Passione: Now, John, what do you see as the, the distinction between the membership? I mean, what is, what is, uh, obviously Atlanta Postal, right? One of the oldest credit unions in this in Georgia, right? You just said a hundred years old, which is pretty amazing, and, and its roots was in the postal services. Now you create center park and the, the, the question is, do these, do these members look different? Do they actually interact with the brand differently?

[05:27] John Anderson: They do quite a bit. Yeah. It’s, and I’m, I just assumed that all credit unions that go to the community face similar challenges, but certainly initial results were not as regular payers, not as reliable. Um, a good bit more fraud. Uh, so a a little bit different inter interaction. I think historically we had an older, um, membership base, so community focused, it, we had to prioritize digital, which, you know, admittedly we were lacking a bit on. So yeah, the, the branch traffic, I wouldn’t say has increased much with the community presence, but certainly digital, um, and just less, less loyalty to the brand. You know, these are, these are folks that have never heard of us, so I don’t think we expected ’em to perform similar to our, our long time loyal post postal members. But the disparity has been somewhat eyeopening.

[06:18] Vince Passione: And what would you have done differently, John, do you think you would’ve not have launched the brand?

[06:23] John Anderson: I think the, the brand was necessary. Um, you know, it, it’s, it’s too, it is too much of a risk, I think, to depend on one segment, uh, in the, the postal services has been through its trials and tribulations and threats of cuts. And, uh, I don’t envy the, the challenges they’re facing internally either. So I, I think it was necessary. I don’t know that we would’ve done anything different, but, um, it, it’s been a learning experience for sure.

[06:47] Vince Passione: Great. John, let’s, let’s, let’s just switch over to the deposit side because we were chatting before we got started about deposits. So obviously the industry went through this big liquidity crunch, right? Um, a lot of credit unions turning around and using a home loan bank right. To, to supplement where’s Atlanta Postal? And what has been your strategy? I mean, we talked about your deposit base, right? It’s feast or famine on, on certain days, but what w how did you get through the liquidity crisis, and where do you find yourself now when you look at that deposit base and your sources of funds?

[07:20] John Anderson: Yeah, we, we found ourselves in a, a unenviable position of being extremely liability sensitive. And, you know, just, and it makes sense, you know, our, our postal members love their CDs and, and we love to pay as much as we can on them so that, that quick rise in rates really bid us in the past couple years. Mm-hmm <affirmative>. Uh, strategically, we’ve, we’ve pivoted to more of a, a savings money market approach. We try to re reward our members there as much as we can, um, just so we’re not locked into paying those high rates is for long periods of time. Um, I, I think by and large, we, we’ve probably, uh, reduced our CD concentration a little bit, but been able to retain most of the deposits for our members just by having a, a secondary offering for ’em.

[08:03] Vince Passione: Okay. So, John, let’s switch to the, the lending side of things. So we’re about, we’re at the halfway mark, and this is the time that most credit unions start thinking about their strategic planning cycles and scenario planning. So first question, in your strategic planning cycle, how many scenarios do you plan with? I was at a conference and CEO of a, I think it was an $8 billion credit union, got up and said that, you know, he has 25 scenarios that he maintains with his board, you know, including couple for what happens if tax exemption status disappears. So, scenario planning in Atlanta Postal is this, uh, does a half a dozen, is it, is it two <laugh>?

[08:41] John Anderson: Uh, well, that, that puts me to shame of it. Vince. I, I don’t know that we plan for 25. Um, uh, I think we a little, uh, maybe a little overkill will just lead to inaction. Mm-hmm <affirmative>. So we, we, we look at things, the, the postal service reduction in force, that’s always been on our radar. Uh, we do a good bit of GSA lending, which, um, of course this year, if you’ve watched the news at all, is, is terrifying, uh, with the, the speed at which they’re canceling those leases and mm-hmm <affirmative>. Um, so yeah, we do some typical interest rates up and down, um, a couple hundred basis points either way. Uh, i, I don’t know that we, um, we’re trying to diversify out a little bit, and that was part of the community brand. So if there were a large reduction in postal force, it wouldn’t be, um, such a hit to us

[09:27] Vince Passione: Mm-hmm <affirmative>. And therefore the, the change in brand and, and trying to be more community focused. Right. So, John, based on that, what’s the big lending trends as you think, and challenges that you’re gonna have on the agenda as you start going into planning?

[09:40] John Anderson: Yeah, I think this year we, we’ve been talking quite a bit about the surprise return of deposits to the credit union this year, and, and what that means for lending. We, we, we always prioritize our organic lending and never want to turn it off or raise rates to be prohibitive for members requesting loans. But, you know, with, with the rates out there, um, with an eye on interest income, we, we feel like we’ve got to deploy those funds, but we just haven’t seen the, the credit underwriting that we would like in, in order to open the faucet a little bit more on our organic side. So we, we’ve seen a shift to more, um, origination partners, um, LendKey being one, of course, just to help us get different asset classes, get, get funds deployed at, at market rates that we just can’t find internally.

[10:27] Vince Passione: Now, John, what, when you, for that particular strategy, and we’ve talked about this in the past, you’re going out, you’re working with fintechs. Does it all show up to you as indirect lending? Is that the way you look at it?

[10:40] John Anderson: Yes and no. I mean, it certainly is, it is got all the hallmarks of indirect lending, but we have experienced a little bit better up uptick in, in cross-selling with these members. Uh, I, I, I, I guess it’s some somewhat of how they enter the channel. Um, we, by and large, we’re saving them money by refinancing existing debt that that’s kind of their first entry into the credit union. And we’ve got an outstanding team that reaches out, memorizes them, talks through other options at the credit union, and, and we try to put our best foot forward. So while it, it, it is definitely indirect adjacent, we, we feel like it’s a little bit more rewarding than your typical indirect auto.

[11:21] Vince Passione: Now, John, can you share how you do the onboarding? ’cause typically in the scenario, so I think refi Jet’s one of your big partners, right? We talked about that. So they don’t, most of the fintechs don’t wanna see a disruption in the process. They’re using credit unions to fund, but other sources of funding as well. And that memorization process tends to take the same shape and form that it does in the auto, in the indirect lending channel, right. Where a membership form is placed in the package as the f and i officer is going through the closing, closing process in the dealership. Take me through how you disrupt that a bit so that you then can really memorize these folks and introduce different products to them. Is it done digitally? Is it done over the phone? Is it being done through direct mail?

[12:00] John Anderson: Yeah. Yeah. I mean, you touched on all the challenges of that. I think we’ve, we’ve done a, a pretty good job with the, um, with the help of our partners. Yeah, you mentioned refi, jet Mark three is another one. Um, mm-hmm <affirmative>. That we’ve begun doing recently doing unsecured loans with, we, we have to do a digital, um, historically we’ve been a, uh, mail out a form to sign and send back to us kind of institution, but I, I, I don’t know that anyone would put up with that, either the borrower or the, the FinTech partner. So absolutely digital integrated into the workflow. It’s just part of the process. Um, you know, not everyone reads everything they’re signing as part of that process. So that’s why we follow up with a, a phone call. We certainly don’t want members thinking we’ve opened up a primary share account without their permission. So we do make a point to, um, speak over the phone with every member that comes into the credit union.

[13:00] Vince Passione: John, how much does servicing play into developing the relationship with this indirect loan member? But I can call ’em that for now,

[13:09] John Anderson: <laugh>. Yeah. Yeah. We, we could call ’em that. It, it’s crucial to me, um, given the preference, we’ll always take servicing there. There’s, there’s occasions where that’s just not possible. Um, we feel like Lin Key does a great job servicing on our behalf, so we appreciate you guys for that. But thank you. You refi, jet Mark three, both. We, we service those loans and, you know, I think that really builds the loyalty where you mail your payment, who you call if there’s a problem. Uh, I think that just kinda helps reinforce our desire to actually become a, a partner with our borrowers beyond just this first initial interaction.

[13:43] Vince Passione: So, let’s back up. Let’s talk about the auto refi market. I’ve taken a look at that a few times. There’s lots of competitors in the marketplace. They’re going after these customers, and it is a product that reminds me of education refinance when we stepped into our credit unions back in 2011, where consumers aren’t really that well aware. They’re not very aware that they can actually refinance their auto loan. It’s a product that seems to be sold, not bought. When you look at that market, I, is it a a market where you think consumers are, are really aware that they can actually refinance? Um, how does this loan perform against your, your indirect auto portfolio today that perform better, perform worse

[14:25] John Anderson: Too early to tell this, this is a new venture for us. So I, I’ll definitely follow up with you on the performance aspect, but yeah, I, I just, I think it’s, it’s probably something most folks would rather not be troubled with the, the, you know, shopping for a new rate. Um, I think that’s, that’s really the genesis behind the partnership. We, we, we don’t know when members are out there shopping rates. Um, they’re, they’re going to the lending trees and the Credit Karmas of the world, and, and all of a sudden they’re getting inundated with offers that they didn’t ask for. Uh, but if they’re appealing enough, they’ll take advantage of them and, and we’ll be none the wiser. So, uh, while we would certainly prefer them to come directly to us, we, we’ve seen a pretty strong shift lately where, uh, members just don’t reach out when they’ve, when they’ve got a need, we would love for them to, and we, we try to, um, make it a one-stop shop where they feel like they can come here. But we, we are finding ourselves more and more often buying our members back from aggregator sites that then, um, turn around and sell them to other institutions.

[15:29] Vince Passione: Yeah. Member recapture is important, especially in the point of sale world, you’re, you’re spot on, right? We’ve talked about this in the past in different episodes of the podcast, and, uh, Brian Cass had mentioned this, uh, from true stage that, you know, point of sale, a real threat to credit unions and also an enormous opportunity. ’cause as you said, you know, your member is out there, they’re being solicited. I mean, we know that in the auto space, right? Uh, that’s been going on for decades now. Uh, but, but the idea that now consumers will show up at buying furniture, uh, they’re getting invisaligns, they’re getting lasik, and they’re being solicited for financing at the point of sale. Uh, and you’re not aware of it. And there are ways for us as fintechs, and I’ll put myself in that category to figure out that when I’m interacting with someone at the point of sale, whether they’re a member of Atlanta Post or not, and to remind them that they are, and let them know that you have a product or service for them that they can get through this channel.

[16:28] Vince Passione: So being at the point of sale, I think is gonna be pretty important because you’re sort of reactive at that point, but you have to be, right, because people don’t wake up in the morning and say, I’m gonna go banking. Right. Not to slander credit unions and using that acronym. John, uh, we didn’t touch on this at all in the, in the preview, but ai, I, I don’t leave these conversations with ever getting into discussion about what’s the impact of artificial intelligence in your credit union. You know, certainly in my business, um, you know, when I think about originating loans and servicing loans, there’s just so many opportunities to, to automate a lot of the work that we’re processing, get rid of manual work. What are you seeing in your credit union as far as the adoption of, of AI in your back office or perhaps on the, on the credit underwriting side?

[17:15] John Anderson: Yeah, we luckily early on in my credit union career coming out of banking, um, it, it just so happened I think that AI was the talk of the town. And we, we, we got the green light from our board to test it out. And it’s been great so far for us. We, we, we’ve been automated underwriting for, gosh, three or four years now. Got a lot of back office, uh, stuff, processes, and skip a pays and loan modifications that are all ai. I think the, the latest and greatest, our, our friends at Clutch are coming out this week. They’ve got a AI robot that’s making collection calls on our behalf. And, uh, I was terrified to even mention that to our board, but after hearing this thing talk, uh, I had to remind myself that it, that it’s not a human, it is just advancing so rapidly. I, I, I don’t know that you can escape it, but I don’t know why you’d want to. We, we’ve had great success and, um, particularly with the partners we’ve chosen, been a really good venture for us.

[18:12] Vince Passione: Now, John, is that, is that totally automated or is there a human in the loop? How do you, what kind of governors do you have on it?

[18:19] John Anderson: Yeah, we, we are actually looking to launch it this week. We’ve been testing for months, and it is amazing. I, I never, you know, collections is a, it’s a, a touchy subject. You know, you don’t, you don’t want that to go poorly. So we, we put all that forethought into it and this thing’s working out payment arrangements and getting promises to pay, and then, uh, taking that back and note it, notating it in the system. It’s really taking a lot of the heavy lift, early delinquency, payment reminder kind of stuff off of our plate. Uh, I, I think we, we wanna back that up with a, a human where, where necessary, um, but really free up our collections team to have those important conversations. Not the, you know, Hey, you forgot to make your payment this month. So yeah, we, we’ve got some governors on it. We’re, we’re keeping a close eye on it, but, um, I’m excited. It, it’s just with delinquency being high right now, the, we don’t have the ability to go out and hire a whole new team of collectors. Uh, I think it’s just a, a, a bigs force multiplier for us to, to turn the bot on

[19:19] Vince Passione: And, and Sean integrating it into, integrates into your servicing system today to get a promise to pay. If it’s doing a restructure, it’ll integrate into that servicing platform.

[19:28] John Anderson: We’ve got it right into the core, actually. Um, okay. So yeah, it, it’s, it’s integrated and it’s got a dashboard where we can monitor it. Who’d you talk to and how did it go? Uh, kind of some sentiment analysis. It, it’s amazing. Not, again, nothing that we would ever dream about trying to come up with on our own accord, but, um, the, these tech companies are just moving at speed of light and we’re, we’re grateful for it.

[19:52] Ron Draper: This is Ron Draper, CEO of someones credit union. So in 2014, we were looking for a turnkey student lending solution, one that was simple and efficient for our members to access. And eventually we chose LendKey because it just integrated seamlessly for quick member mobile access, and was easy to remotely review and approve from a loan officer point of view. And I should know, because I’m that loan officer, I still recommend LendKey to people whenever I get the chance, because after almost a decade, it continues to offer consistent product and service delivery, both to our membership and to our staff.

[20:31] Vince Passione: How does Atlanta Postal, how do you immerse the team into ai? Any, any sort of best practice that’s really worked for you?

[20:40] John Anderson: Yeah, I, I think there’s just some initial concern that, that AI is gonna replace their jobs. That, that was, was, that was a hurdle, and I totally understand it, and it, it makes sense, but no one wants to do routine, monotonous, repetitive requests all day long. I, I think our team actually is excited to do away with some of the antiquated processes. Um, we tell our staff don’t continue doing something just because that’s the way it’s always been done. Um, that that’s a motto we live by. And, and so it’s really, we get all kinds of suggestions from our team that, Hey, this is really tedious. We’re, we’re mailing a form out to a member to sign this. Is there a better way to do it? So it, it’s kind of promoted that internal drive to fix some of these things. And, um, ever since we’ve been doing that, we’ve had no pushback when we, uh, finally are able to launch these things that make their job easier and allow them to focus on the member a little bit more, it, it’s kind of been a win all the way around.

[21:38] Vince Passione: Great. Now, we said in the opening, John, so you’re, you’re 20 some odd years in financial services, right? Started in the credit union system in 2021. So you’ve been at this a long time, you’ve seen a couple of cycles. Um, when you think about lessons you learned, what’s been the hardest lesson to learn both free credit union and now in the credit union system?

[21:59] John Anderson: Uh, it’s such a, such a shift coming from the banking world to the credit union. I, I, I think before my hardest lesson was that you, you can’t help everybody. And, and I think that kind of got turned on its head when I came to the credit union. So, um, right <laugh>, which is a great, a, a welcome change. And, and I love every bit of that. But, um, I, I think it’s just, you know, even at the credit union level, you, you can’t do as much as you’d like to. We, we, uh, when I first saw my first couple of FICO scores come through on, on the approved loans at the credit union, I was, uh, taken aback. Uh, but they quickly, uh, taught me that that’s, that’s okay to do here. We, we try to help our members and, you know, if, if, if we can’t do that, then we’re no better than the bank. So I think it’s just tempering that with, with financial soundness, you know, we, we do have mm-hmm <affirmative>. Um, an institution to protect. We, we can’t serve members if we’re not here to do it. So, uh, kind of making that balance, I guess is just the biggest challenge.

[22:54] Vince Passione: Awesome. John, last question. So you moved from a VP into Chief Lending officer pretty quickly. Um, what advice do you have for other folks who are gonna, who thinking about going through that transition, what should they be asking themselves as they, they think about that Chief lending Officer spy?

[23:10] John Anderson: Yeah. Uh, <laugh>, I think long and hard, it, it, it is, uh, we have a, a, a pretty good culture of promotion from within. So what we find is that we’ve got folks that are, know our members, know our philosophy, know our culture, but may not have experience in the job they’re moving into, um, which is cool to me. I, I, that’s the kind of place I wanna work at. That’s, that’s why I was promoted so quickly, I think. Um, so it’s, I think it’s just important to not try to over-engineer your day. We, we have VPs that are new into the role saying, are you gonna train me on how to do this, this job? And we have to say, no, you won’t need to be trained. The, the work will find you. Um, you don’t have to go looking for it. You, you won’t know what your day looks like, uh, until you, uh, pick up the phone and open your email and, and your day will, uh, tell you what’s gonna happen. So I think it’s just having an open mind, being open to that learning. Uh, we’ve, we’ve got a great staff here that, um, most of them that are in higher level positions have been here 10 plus years. And it’s, it’s an awesome thing. I would much rather promote from within than try to go external for those kind of roles where possible. And, and I think we’ve been rewarded for it.

[24:24] Vince Passione: Excellent. Excellent. Well, John, we’re gonna leave it there. Thanks a lot for joining us there. I really appreciate your time.

[24:29] John Anderson: Thanks for having me, Vince.

[24:30] Vince Passione: And to our listeners, be sure to subscribe wherever you get your podcast so you never miss an episode. I’ll catch you back here at our next 22 minutes in lending. Thanks again, John.

[24:38] John Anderson: Thank you.

[24:40] Narrator: Thank you for listening to the 22 Minutes in Lending podcast. We hope you enjoyed today’s episode. You’ll find links to any resources mentioned in the show notes. If you’re enjoying our show, be sure to subscribe and leave us a five star review.