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Vernon Building Society shares many good characteristics with its hometown football club, Stockport County. Most importantly, they both care passionately about their local communities.
The football team currently occupies a League One play-off place. Owned by successful property businessman Mike Stott, who was born in nearby Hazel Grove, the Hatters go to great lengths to welcome their fans, young and old. older.
Last month, they charged children five dollars to attend the team’s FA Cup match against Brackley Town, a match they won 3-1, securing a lucrative third round match against top club Crystal Palace in the New Year.
And as Ian Ladyman, my sports colleague at the Daily Mail, recently said, it wasn’t a one-off. At last month’s home game against Bolton, the club offered children’s entertainment before the game and at half-time.
To put this into perspective, Manchester United, just ten miles from Stockport’s Edgeley Park stadium, now charge children £66 to watch a Premier League match. Totally outrageous: Stockport’s starting price for children’s tickets to the home game against Exeter yesterday was just £2.
Vernon shows its local community leaning in other ways. Outside Stockport, it has branches where there are no other banks or building societies: Poynton, Cheshire and Reddish, Greater Manchester.
Hats off: Stockport County ground. Steve Fletcher, right
Although its Bramhall branch is the last bank or building society branch standing, there is a nearby banking center (a community bank) run by the Post Office. In Hazel Grove and Marple, it competes with NatWest and Nationwide respectively.
Steve Fletcher, Vernon’s chief executive, will retire in 12 days. But he says his seven-year spell at the building society has been the happiest of a career in which he worked at Birmingham Midshires (bought by Halifax), Clydesdale and Yorkshire Banking Group (now Virgin Money, part of Nationwide) and Woolwich (bought by Barclays).
When Fletcher joined Vernon in early 2018, the building society was struggling.
“It wasn’t modern,” he told me last week. ‘Not in the way he treated customers or staff. “The regulator also needed to be sure the business was sustainable.”
Fletcher set out to revitalize Vernon. The society’s boardroom was renovated and made more “professional.”
But most important was a fierce determination to grow the mutual’s assets through the mortgage business. Unlike many big rivals, which now use computer software to support loan applications – giving borrowers a thumbs-up or thumbs-down – Fletcher opted for a different approach.
Loans are now individually underwritten, allowing the partnership to make loans to borrowers that most other lenders would turn away from. The result is a mortgage portfolio of £500m, compared to £290m when Fletcher joined Vernon.
All six branches have been refurbished (Marple will reopen just before Christmas) and while passbooks remain an essential part of their offering (“savers love them”), all accounts can now be operated online .
“When I was at Clydesdale and Yorkshire Banking Group,” says Fletcher, “I was responsible for axing branches, sometimes leaving a town without a bank.” It was about cutting costs and keeping shareholders happy. In this case, we have tried to create options for customers. Everything we do is the right thing, whether it’s donating to local non-profit groups or charities.’
Vernon doesn’t make huge profits (£2.2m last year), but enough to survive. Earlier this year it celebrated its centenary.
Let’s hope new boss Darren Ditchburn continues the good work to ensure Vernon remains as integral to the communities it serves as the Hatters are to Stockport.
Long-standing funds continue to get stronger
Happy anniversary to JO Hambro Capital Management (JOHCM) UK Equity Income and Law Debenture investment funds.
JOHCM UK Equity Income, a £1.7bn fund, has just celebrated its 20th birthday, while the Law Debenture investment fund will celebrate its 135th birthday weekly on Monday at the London Stock Exchange headquarters, near the St. Paul’s Cathedral.
Both funds remain relevant for investors. JOHCM UK Equity Income has outperformed the FTSE All-Share index over the past one, three, five and ten years, and managers Clive Beagles and James Lowen are confident that 2025 could be another good year. In their latest update, they claim they can deliver dividend growth next year in excess of five percent. They are also encouraged by the fact that the majority of their 60 or so holdings are “buys.”
With the base rate likely to fall, an annual dividend yield next year of around 5.1 percent looks attractive.
Law Debenture also focuses on UK equity shares, albeit with a twist. While around 80 per cent of its assets are invested in listed shares (mainly UK companies) and managed by investment house Janus Henderson, the remainder comprises ownership of unlisted financial company Independent Professional Services (IPS).
IPS has several branches going for it, providing trust services to companies and company pension funds, and a secretarial service for companies. It generates a lot of revenue, which enhances its ability to pay shareholders an attractive income stream.
Charity left reeling by NI tax raid
A few days ago I visited a local charity, the Wokingham (Wade) Elderly and District Association.
Philip Mirfin, chairman of the charity’s trustees, gave me a tour of Wade’s facilities and explained the crucial service it provides to many of the older people living in the Berkshire town.
“We are a small but necessary charity,” he explained. ‘For those over 60 we offer daycare services, where they can feed themselves, pamper themselves a little and meet other people.
‘They feel loved and less alone. If they live with family, this gives them a respite.”
No other organization in Wokingham offers such a vital service for older people. However, like many charities and hospices, Rachel Reeves’ foray into National Insurance will hit Wade hard.
Mirfin estimates that alongside the higher minimum wage – but after the increase in employment allowance, which small employers can use to mitigate their NI costs – Wade’s NI costs will rise by £27,000 next year.
It’s not a huge success on the surface, but it is when Wade spends more on the childcare he offers (£578,846 last year) than he generates in income (£513,615).
Like similar charities across the country, Wade provides a key service at a time when social care provision in this country is creaking.
Surely Reeves’ NI raid wasn’t meant to include them?
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