The oldest building society in Lancashire, dating back to 1859, the society was originally created to help mill workers buy their homes.
The mills may have long gone but chief executive Stephen Penlington, who has been at the helm for the last seven years, is proud that the Chorley is still going strong.
He said: “The society is 38th in the league table based on asset size, out of a total of 47. I was looking back the other day and realised that when I started in the 1980s there were about 227, so I am delighted that Chorley is still here.”
Mr Penlington said the mutual had achieved three consecutive record years, and added: “Things are going exceptionally well. We have almost 2000 borrowing members and 30,000 savings members. We have maintained our three branches and we have no intentions of closing any of them whatsoever.”
The society was looking to open new branches as and when the opportunity presented itself. He said: “What we are very strong at is face-to-face customer service and while we are investing heavily in new technology, we believe that face-to-face customer service is still extremely valued by our members. We want to expand the direct distribution, as I call it, and invest in more direct representation in our local communities.”
But as Mr Penlington suggested, the internet was still important and the society had invested heavily in new technology after the recent problems that have affected banks.
He said: “The banks have suffered severe reputational damage and our members are coming to us and saying that they understand that we are traditional and that we do mortgages and savings and that we have stuck to the knitting and that is why it is our strength. But they want us to provide some of the services that the banks provide because they basically tell us that they do not want to deal with them any more as they don’t trust them. So we see it as a fantastic opportunity for us now to push on.
“We have got tons of capital and liquidity, superb quality assets and that is giving us a platform and we can now respond to what our members are asking. So as well as providing traditional mortgages and savings, we will move into other areas.”
One area under consideration offering is prepaid cards so that customers cannot go overdrawn or build up debt.
Mr Penlington said: “While customers can use it like a credit card, or a card in the ATM machine, it is from a pre-funded value. It is ideal for students, or older people for example, who have carers coming into the home and do the shopping for them. They can give them £20 on the card and that is all they can spend.”
He added the Chorley also wanted to move towards providing internet savings and mortgages, which he said was “the future”.
Mr Penlington said that before the crisis and the damage that the banks created for themselves through mis-selling, for example, people knew that building societies were a trusted brand, but they might not have quite understood the concept of mutuality.
He added: “The model that we have here, every time a customer walks into the branch we see them as one of our owners and it really makes a difference. When I come to work every day my ethos is to maximise member value, and that is so different to maximising shareholder value.
“I don’t need to make a profit to pay dividends to shareholders. We understand that the banks spend about 30 per cent of their profits doing that, but we don’t do that. We retain those profits and pass them back to our members in terms of higher savings rates and lower mortgage rates, which is why building societies are dominating the best-buy tables at the moment.”
Mr Penlington said he thinks that concept is starting to seep into the public awareness. He said: “We have had an incredible increase of inquiries from people who are dissatisfied with the banks locally. It is subtle little things, such as the fact that we don’t incentivise staff on sales targets, so when you walk into one of our branches you are not being bombarded with sales advisers, and it makes a difference.
“When I used to work with another organisation the approach was to ‘push customers through and push them away from the branches and on to the internet. Get them out to ATMs as we don’t want our branches clogged up with people that we can’t sell to’.”
Mr Penlington said that at the Chorley it was completely different and the mutual was playing to what its members want, its maxim: traditional values in a modern world.
He was confident that the future was good for the Chorley following its three record years.
Mr Penlington said: “I think the future is very bright. We have had three record years and now we are looking ahead with confidence. Last year alone we grew our mortgage business to record levels and it was 38 per cent up on the previous year.”
He added that the mutual had “gone back to its roots” as it was trying to help people on to the property ladder, taking it back to its Victorian roots of mill owners setting up a society to build houses for mill workers.
Mr Penlington said: “People are saying to us at the moment that the biggest problem is trying to find a deposit. So we are offering 95 per cent loan-to-value mortgages. We are also doing it on an interest-only basis, and now that we are a major player in the self-build market we have gone full circle. What we are doing is finding these niches and opportunities to help stimulate the market wherever we can so people can still aspire to be homeowners and get on to the property ladder without having to find huge deposits and save for years and years.”
Mr Penlington’s only gripe with the society? He wished that it were bigger.
He said: “I just wish we were bigger. The one advantage that the banks have is bigger economies of scale. If we had that we could get our message out to more people.”
Amy Ellis is senior features writer of Financial Adviser
Key Points
Chorley dates back to 1859 and is the oldest building society in Lancashire. It was originally created to help mill workers buy homes.
The banks have suffered severe reputational damage and society members have said that they understand that Chorley is more traditional with mortgages and savings.
Chorley is offering 95 per cent LTV mortgages to help buyers on to the property ladder.
The facts:
Established: 1859
Incorporated: 1896
Number of branches: 3
Number of full-time staff: 35
Number of part-time staff: 10
Number of borrowing members: 1,818
Number of investing members: 26,383
Total members: 28,248
Number of depositors: 4
Key highlights of 2012:
- No properties in possession at the year end. (2011: nil)
- Surplus before tax of £755,000.(2011: £817,000)
- Gross mortgage lending up 9.21 per cent to £30.4m (2011: £27.8m)
- Net mortgage balances up 3.36 per cent to £124.0m (2011: £119.9m)
- Capital increased by 5.04 per cent to £11.95m (2011: £11.38m)
- Strong liquidity ratio of 30.08 per cent (2011: 33.39 per cent)
- Management expenses ratio held at 1.14 per cent
