SALT LAKE CITY — For many credit unions a position in the Top 5 of Callahan's rankings is a mixture of hard work and happenstance, but for Deseret First CU, it's all part of the plan.
According to Kris Mecham, CEO of the $500-million CU, its No. 3 ranking in the Total Return of the Member category for the $250 million-to-$500 million asset class is part of a long-term process, dating back to the CU's board looking at capitalization during a planning meeting in the mid-1990s. "The board wanted to grow capital, but also wanted to give back to our members as best we could," he recalled. "We intentionally identified the criteria Callahan uses for its rankings. Our board was at a strategic planning session and adopted a capital ratio goal while at the same time looking for the Callahan's rankings."
As a result, Mecham pointed out, Deseret First scores well in all three of Callahan's categories-Return of the Saver, Return of the Borrower and Member Usage. How do they do it? "No. 1, we have an incredible staff," Mecham declared. "Our staff cares more about the service culture, rather than the sales culture. They have a willingness to look at every member while they are in there, identify what services we might do better than elsewhere, and then ask about it. But it is for helping the members, not selling them."
Pricing for Success
The second reason for success is pricing, he continued. Mecham said Deseret First always wants to be in an area where its members are priced better than elsewhere. "We don't undercut with such volume that it would damage the credit union, but we try to make sure we are reasonably priced but less than the competition," he said. "We don't do fire sales."
The third avenue is DFCU's goal of service with its members. Employees get to know members by name and will "watch out for them," he said. Once the employees have gained the trust of the members, then an attempt is made to encourage members to use electronic services as much as possible. "Those three areas help us get a high percentage of checking accounts-to-members and service levels," Mecham assessed.
Is 9% the Magic Number?
When Deseret First deployed its capital growth strategy it approached a 9% net worth ratio, and 9% was a number the board felt reflected adequately capitalized, Mecham said. When capital exceeded that figure, the board would consider a bonus dividend or fund a new product or service.
Because of high growth and economic conditions the last few years, "the capital ratio of DFCU currently is above 6%, not a number we're proud of, and it has caused the board to rethink the 9% ceiling to a larger number in the future," he said.
Deseret First builds capital "by the synergy of the members using multiple services and with specific attention to keeping operational expenses low while growing assets," Mecham continued, noting that fees are not a strategic initiative to build capital because it is the low fees DFCU offers that keep the credit union in a high category in total return to member.
"The board reviews this strategy annually. We have never reached 9%; we are in a capital rebuilding mode. I'd say 9% was probably too low. I expect a higher ceiling will be established at our next strategic planning session."
Deseret First's motto is, "Doing it Right." Each month management gives out a Doing it Right Award, where the recipients are nominated by their fellow employees. It is quite a coveted honor, Mecham noted.
"We have an advantage in that we are a closed field of membership credit union and a faith-based credit union. There is a commonality that gives an extra incentive for service and courtesy. Then, we build upon those fundamental core values of faith, courtesy and respect they learned in Sunday school, and give them a sense of belonging at the credit union. We are really fortunate."
Deseret First serves members of the Church of Jesus Christ of Latter-Day Saints and their families. It also serves employees of the Mormon Church and affiliated companies and their families.
