Charter Oak seizes
opportunity in mortgages
By Anthony Cronin
Published 02/13/2011
Charter Oak Federal Credit Union CEO Brian Orenstein at the credit
union’s headquarters in Groton Wednesday. Tim Cook/The Day
Credit union makes big inroads
with innovative products
Brian Orenstein and his senior management team were looking for an opportunity.
For years, the Groton-based Charter Oak Federal Credit Union had been a big lender for auto loans, but given the steep downturn in the auto industry in 2009, his institution needed to diversify to protect its bottom line.
So Orenstein and his team looked to real estate, believing that mortgage lending - especially consumers looking to refinance - could yield significant growth.
Indeed, it did. During 2010, the credit union originated more than 1,000 mortgages with a value in excess of $130 million for New London and Windham counties. This past year, Charter Oak ranked number one in mortgage transactions in the two counties, says Orenstein, citing figures from the Boston-based Warren Group, which tracks lending activity among banks, credit unions and mortgage firms.
Orenstein, who is Charter Oak’s chief executive officer, praises his lending team for the growth in mortgage-related loans, and says the hiring of longtime bankers John Dolan and Jane Moriarty made a difference. Both, he says, are experienced commercial and real estate lenders who helped to revamp lending processes and boost lending efficiencies.
In addition, Charter Oak ramped up an aggressive marketing and advertising campaign for its no-closing-cost Cost Saver and Accelerator mortgage products, which are designed for mortgage refinancings. The Accelerator product, which has an eight- or 12-year term, accounted for more than 61 percent of Charter Oak's mortgage activity in 2010.
Orenstein says Charter Oak created the products because it believed that during a difficult economic time borrowers would rather pay down their existing mortgage debt through refinancing than invest in low-yielding products such as certificates of deposit or take a wager on stocks.
Dolan, an executive with the Dime Bank in Norwich, came aboard Charter Oak in 2009 as senior vice president and chief lending officer, while Moriarty, a senior lender with Eastern Federal Bank in Norwich, joined the following year as a vice president of commercial lending.
The Charter Oak lending team originated a total of $132 million in mortgages for both counties this past year - $115 million in New London County, representing 859 mortgages, and more than $17 million in Windham County, representing 172 mortgages.
“We closed more mortgages than any other financial institution in eastern Connecticut,” says Orenstein, who was named Charter Oak’s chief executive in 2007 after serving as its chief financial officer since 2004. “More than the mega banks, more than the community banks,” he adds. “Truly, an amazing accomplishment.”
That lending performance in 2010 helped Charter Oak close out a strong year financially. Its bottom line for 2010 was $4.9 million, about even with the previous year, while core earnings, representing its operating results, grew from $3.1 million in 2009 to $5.8 million last year. The credit union's deposits in 2010 grew 4.6 percent to $546 million and its loan portfolio also increased 4 percent to $488 million.
Charter Oak's overall capital, a prime indicator of its financial strength, rose $6 million to $63 million in 2010 - far exceeding the $45 million in capital that represents a well-capitalized institution by regulatory standards.
“As a credit union, we’re a nonprofit institution (owned by its depositors). But we have to make earnings to fuel future growth,” says Orenstein. “We also need to remember to give back to our members and our community. That’s why 2010 was such a great year for us. We earned a good amount, and we gave back a good amount.”
As part of a new giveback program called “Gold Rewards,” the financial institution deposited $100 into 2,610 accounts, giving back a total of $261,000 to those who qualified for the program. “I’m so proud of our staff and thankful to our membership,” says Orenstein.
Charter Oak, founded in 1939 to serve the interests of the Electric Boat shipyard in Groton, is today a community-chartered institution serving a broad base of those who live or work in New London and Windham counties. It now has 11 branches, including two high school branches at Groton’s Fitch Senior High School and Killingly High School.
Charter Oak’s total assets of $653 million make it the third-largest credit union in Connecticut, topped only by the American Eagle Federal Credit Union in East Hartford in second place and the Connecticut State Employees’ Credit Union in Hartford.
Orenstein credits the institution’s continuing growth to its 171 employees, many of them longtime associates who have worked hard to grow programs and services for the membership.
While Orenstein says 2010 was a year of multiple accomplishments, he remains confident the economic recovery will pick up steam across eastern Connecticut, along with continued growth at Charter Oak.
“We have high hopes for 2011, as well,” says Orenstein.
