Vernon Building Society shares a lot of good characteristics with its hometown football club, Stockport County. Crucially, both care passionately about their local communities.
The football team currently occupies a play-off spot in League One. Owned by successful property businessman Mike Stott, who was born in nearby Hazel Grove, the Hatters go out of their way to be welcoming to supporters, young and old.
Last month, they charged kids a fiver for attending the team’s FA Cup match against Brackley Town – a match they won 3-1, securing themselves a lucrative third-round fixture against premiership club Crystal Palace in the New Year.
And as Ian Ladyman, my sports colleague at the Daily Mail, said recently, it wasn’t a one-off. At last month’s home game against Bolton, the club laid on pre-match and half-time entertainment for children.
To put this into perspective, Manchester United, just ten miles from Stockport’s Edgeley Park Stadium, is now charging children £66 to watch a Premier League fixture. Utterly scandalous – Stockport’s starting price for children’s tickets yesterday at the home match against Exeter was just £2.
Vernon displays its local community bent 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’s ground, and Vernon Building Society boss Steve Fletcher, right
Although its Bramhall branch is the last bank or building society branch standing, there is a nearby banking hub (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, is retiring in 12 days. But he says his seven-year stint at the building society has been the happiest of a career in which he has worked at Birmingham Midshires (snapped up 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 it treated customers or staff. The regulator also needed to be assured that the business was sustainable.’
Fletcher set about reinvigorating Vernon. The society’s boardroom was overhauled and made more ‘professional’.
But more important was a steely determination to grow the mutual’s assets through doing mortgage business. Unlike many big rivals, which now use computer programmes to underwrite loan applications (giving borrowers a thumbs up or down), Fletcher decided upon a different approach.
Loans are now underwritten individually, enabling the society to lend to borrowers who would be given the cold shoulder by most other lenders. The result is a mortgage book of £500 million, compared with £290 million when Fletcher joined Vernon.
All six branches have had makeovers (the one in Marple will reopen just before Christmas), and while passbooks remain an essential part of its 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 with no bank. It was all about cutting costs and keeping shareholders happy. Here, it has been about building choice for customers. Everything we do is the right thing to do, whether it’s making donations to local not-for-profit groups or charities.’
Vernon doesn’t make big profits (£2.2 million last year), but enough to get by. Earlier this year, it celebrated its 100th anniversary.
Let’s hope new boss Darren Ditchburn carries on the good work to ensure Vernon remains as integral to the communities it serves as the Hatters are to Stockport.
Longstanding funds are still going strong
Happy anniversary to investment funds JO Hambro Capital Management (JOHCM) UK Equity Income and Law Debenture.
JOHCM UK Equity Income, a £1.7 billion fund, has just celebrated its 20th birthday, while investment trust Law Debenture will mark its 135th a week on Monday at the home of the London Stock Exchange near St Paul’s Cathedral.
Both funds remain relevant to 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 per cent. They are also buoyed by the fact that a majority of its 60-odd holdings are ‘buys’.
With the base rate likely to fall, an annual dividend yield next year of around 5.1 per cent looks enticing.
Law Debenture is also focused on UK equity income shares, albeit with a twist. While around 80 per cent of its assets are invested in listed equities (mostly UK firms) and managed by the investment house Janus Henderson, the remainder comprises ownership of the unlisted financial business Independent Professional Services (IPS).
IPS has several strands to its bow, providing trustee services to company pension funds and businesses – and a company secretarial facility. It generates a lot of revenue, enhancing its ability to pay shareholders an attractive stream of income.
Charity left reeling by NI tax raid
A few days ago I popped along to a local charity, the Wokingham and District Association for the Elderly (Wade).
Philip Mirfin, chairman of the charity’s trustees, gave me a tour of Wade’s premises and explained the crucial service it provides to many of the elderly people who live in the Berkshire town.
‘We are a small but necessary charity,’ he explained. ‘We offer day care to the over-60s – where they can get fed, be pampered a little, and meet other people.
‘They feel loved and less lonely. If they live with family, it provides the family with respite.’
No other organisation in Wokingham offers such a vital service for the elderly. Yet, like many charities and hospices, Rachel Reeves’s raid on National Insurance will hit Wade hard.
Mirfin estimates that together with the higher minimum wage – but after the hike in employment allowance, which small employers can use to mitigate their NI costs – Wade’s NI costs will rise by £27,000 next year.
Not a huge hit on the surface, but it is when Wade is spending more on the day care it provides (£578,846 last year) than it generates in income (£513,615).
Like similar charities up and down the country, Wade provides a key service at a time when social care provision in this country is creaking at the seams.
Surely, Reeves’s NI raid wasn’t meant to include them?
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