Bnb Credit Union

In: Business and Management

Submitted By clarment
Words 1674
Pages 7
To Adjust or Not to Adjust: The Case of BNB Credit Union
Background Information
BNB Credit Union was founded by the Beiterman family over 100 years ago in the small town of West Klirk, GA. Since its founding, BNB has served the local population with mortgage, auto, and small business loans, as well as otherbanking services. Because of West Klirk’s remote location, BNB was the only bank used by most of the members of the community. In the last twenty years, BNB has struggled to maintain its position as the primary bank of the local community. Online banking services, heavy marketing by large banks in nearby towns, and a small branch office opened in West Klirk by a national banking chain have all served to reduce BNB’s profits.
In order to improve their shrinking deposits and loan portfolio, BNB’s management was forced to increase the interest rate paid on savings accounts, and to reduce interest rates charged on several types of loans. These measures further dipped into BNB’s profit margin, but allowed the credit union to retain most of its customer base. Friendly customer service and less stringent regulations for credit unions also helped.
The situation changed with the banking debacle in 2009. The local branch of the national bank closed in early 2010, and lending limits and new restrictions on many of BNB’s competitors have allowed BNB to slowly improve profit margins. However, BNB still hasn’t fully recovered. The Beiterman family has offered the management team significant bonuses if they can improve profits during the upturn without exposing the credit union to too much risk. The current manager, Sam Oliver, has been pushing his team to do just that.
Introduction
Two weeks ago DSO, Inc., a local manufacturing firm, approached Judy Intersan, one of BNB’s loan officers, for a $1,000,000 loan to expand their facilities. The company was seeking…...

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