Brand loyalty is important to Hank Halter.
When the 48-year-old accountant got the chance to become CEO of Delta Community Credit Union this year after retiring in 2012 as Delta Air Lines’ CFO, he took it.
The credit union, founded in 1940 with eight Delta employees, no longer serves just Delta workers and their family members.
In 2007, the credit union, which had some 50,000 members, flung open its doors to anyone, and now has 276,000 members.
Halter worked for the airline from 1998 to 2012 in various executive capacities.
Q: Why is your membership growing?
A: During 2012, we achieved record member growth of almost 13 percent and welcomed more than 30,000 new members. A lot of these consumers moved their checking accounts over to us from big banks that imposed new fees or introduced minimum balance requirements to qualify for free checking.
Q: Is Delta Community a not-for-profit business like other credit unions?
A: Yes, Delta Community and all credit unions are structured as not-for-profit organizations. Any member of the credit union is an equal owner of the organization. We operate with the same financial discipline as a for-profit-business, but our earnings are shared with members, not outside investors.
Q: Who can be a member?
A: Anyone living in the Atlanta area can join. I think the concept of ‘joining’ or ‘membership’ is confusing or off-putting to consumers who aren’t familiar with credit unions.
Historically, credit unions have served employees of specific companies. Over the years, credit unions have added more companies and geographic areas to their list of coverage. Today, Delta Community serves employees of more than 180 companies and residents of 11 Atlanta-area counties.
Q: What has been your revenue over the past few years?
A: Our annual revenue totaled $194 million in 2012, $191 million in 2011, $187 million in 2010, $189 million in 2009 and $171 million in 2008.
Q: Was Delta Community affected by the recession?
A: Yes, to a certain degree. We had members who lost their jobs and faced hardships. This resulted in higher loan delinquencies and losses. But, we didn’t experience the type of losses that many banks did because we were invested mainly in conservative, high-quality loans and government bonds. In fact, we leveraged our strong financial position to maintain better pricing, add branches and introduce new services when most banks were cutting back.
Q: Do you think the worst is behind us?
A: The economic recovery is likely to remain slow and unpredictable, but we’re encouraged by the improvements we have seen in the housing market. As real estate values have begun to rise, a lot of members who weren’t able to qualify to refinance are now qualifying. It’s gratifying to help these consumers take advantage of the historically low rates available today.
Q: What’s the difference between a credit union and a bank?
A: I think the biggest difference is service. Our loyalty isn’t divided. We’re in business to serve the best interest of our members, period. By the nature of their structure, for-profit banks have to hold something back for the benefit of their investors.
Q: So why do most people go to banks and not credit unions?
A: I think it’s mostly a lack of awareness about credit unions. Many consumers don’t know they can join a credit union or understand how they can benefit.
Inertia is also a factor. Consumers think it’s a hassle to switch from one bank to another. This inertia makes it easier for banks to raise fees and change policies.
Q: So what’s better about credit unions, in your opinion?
A: Service and pricing for starters. Because we’re a not-for-profit organization, we can take a longer view of the customer relationship more easily than for-profit banks. Banks are under a lot of pressure to return higher earnings each quarter. Our employees view themselves as partners and advisers to our members. We look for ways to save them money and direct them to the best options, even it if it reduces our revenue.
Q: Can you compete for people who really want access to branches and ATMs?
A: Yes, we have 26 branches today – 23 in metro Atlanta and three out-of-state branches that we opened previously to serve employees of Delta Air Lines in key markets. We also participate in a shared branch network that’s operated by thousands of credit unions across the country. The credit unions in the network have 6,800 branches collectively. Our members can walk into any of these locations and make deposits or withdrawals on their Delta Community accounts.
In terms of ATM access, we have ATMs at all of our branches. We also belong to the major ATM networks, so our members can withdraw cash from machines operated by other providers.
Q: But aren’t there more banks than credit unions, which is important for convenience?
A: There are 213 banks and 139 credit unions operating in the state. Most banks are significantly larger than credit unions. So, they are going to operate more branches and have greater resources in total than credit unions.
But, credit unions do something banks generally don’t do. Credit unions collaborate more freely. Because they’re not-for-profit, they pool resources and make joint investments in services and technology that benefit all credit unions. This allows credit unions to level the playing field on convenience somewhat
Q: A lot of banks failed in this recent downturn. How did credit unions do?
A: Based on the Georgia Department of Banking & Finance’s 2012 annual report, Georgia had 73 bank failures since 2008 but no credit union failures.
Q: Why was there such a difference?
A: Banks and credit unions were both affected by the economic downturn. I think credit unions weathered the storm more effectively because they tend to have more conservative investment philosophies. We invest mainly in high-quality consumer and mortgage loans. Credit unions didn’t get involved in the subprime loans and private-issue securities that precipitated the downturn because we’re not driven to grow profits.
Q: What percentage of Americans belong to credit unions?
A: Credit unions serve more than 95 million consumers today. According to the Credit Union National Association, credit unions have just under 8 percent market share.
Q: Why just 8 percent market share?
A: It’s mostly a lack of awareness. Many consumers don’t know what credit unions are or the benefits we offer.
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MEET HANK HALTER
Job: President and CEO of Delta Community Credit Union
Education: Villanova University, bachelor’s in accounting; Duke University, MBA
Marital status: Single
Reading: “No Easy Day” by Mark Owen
Philosophy: “Our greatest challenges are also our greatest opportunities.”