MERRIFIELD, Va. - Why did the largest credit union on the face of the earth seek an even larger field of membership? Because, said Navy FCU in explaining its FOM expansion to the Department of Defense, it is the only credit union–indeed, the only financial institution–in a position to serve those members no matter where the military takes them, it said.
“We are unique not just in the credit union world but in the financial world in general in that we have been operating on a worldwide basis for decades,” said John Peden, COO of $32-billion Navy Fed. “We have branches in 18 different time zones. We are going to be where the troops are, and we have more experience than anyone else serving them no matter here they are.”
That uniqueness goes beyond Navy’s international operations.
“We are still one of the few, truly single-sponsor credit unions, even with the expansion,” Peden told Credit Union Journal. “We went from serving the Department of the Navy to the Department of Defense, so we are still single sponsor. But beyond that, we are one of the few pure defense credit unions. There are many good credit unions that serve the military, but many military credit unions have added SEGs or community fields of membership. We have no SEGs, we have no communities; we are a pure defense credit union.”
And that, Peden said, is why NFCU wanted to be able to reach out to all members of the military, regardless of the branch. “It’s the way the military operates today. You have many branches of the military on one military installation, not just one branch,” he said, explaining that as the military continues to integrate among its various branches, it just made sense to serve all of those branches.
“Growth was not our objective. We didn’t feel constrained by our field of membership; there are new people joining the Navy and the Marine Corp all the time,” Peden observed, noting that some 50,000 new recruits go through the Great Lakes Naval training facility every year. “In our history, growth has never been an objective. Our metrics look more at member satisfaction, service levels and product usage.”
As such, Navy Federal hasn’t set penetration goals into its expanded FOM, which went from 4.7 million to nearly 10 million potential members. Instead, the goal is to be where the troops are. To that end, Navy plans to build 30 more branches by the end of the year–all but five of those locations are places where the credit union already has a high concentration of members.
“Right now, about 50% of our members are close to a branch,” Peden explained. “We plan to build 180 branches over the next six years, and hopefully we’ll get that number to more like 80% to 90% of members close to a branch.”
While overlaps among defense credit unions are nothing new, for some military credit unions it could be a bit daunting to have the world’s largest credit union right on your doorstep–but Peden insists that in a lot of cases, Navy is going to be the smaller dog in the fight.
“Take a look at VyStar in Jacksonville, Fla., for example,” Peden said. “They have a much bigger presence in their area than we do. They probably outnumber us three-to-one. Quite honestly, when we move into some of these other areas, we’re the small player, and we’ll have to really work and take a long time to build our status up.”
And don’t expect to see a host of mergers in the wake of this move, either. “We are always open to the idea of mergers, as long as it is something both credit unions want,” Peden said. “In fact, we have had some cases where a military credit union that has gone community charter comes to us and asks us to take over their military members so they can focus on expanding into the community, and that has worked out well for everyone. In August 2003, we got the entire Department of the Navy for the first time, and I can’t recall that any Navy credit union went out of business because of that.”
Navy Federal CU By The Numbers
Assets: $35,265,132,318
Members: 3,050,981
Potential Members Before Expansion: 4,751,700
Potential Members After Expansion: about 10 million
Total Loans: $21,533,839,637
Net Income: $63,697,835
