DEARBORN, Mich.-Mark Shobe takes pride in running an efficient credit union, and knows that as it grows it must keep a tight focus on its strengths while avoiding the bureaucracy and red tape that can take root.
The CEO of $3.5-billion DFCU Financial has his organization running lean and efficiently, at 1.56% net operating expenses to average assets, 1.53% ROA, and 10.76% capital. That allowed DFCU last year to pay members a $21-million special patronage dividend, the biggest credit union payout ever, bringing to $130 million the annual patronage dividends it ha paid since 2006.
Shobe agrees that CUs that have yet to achieve scale need to grow to reach that important operating level. However, he stressed that when the organization reaches that threshold, the "name of the game" changes to strategic focus.
"If you branch off into very diverse lines of business, what happens is bureaucracy sets in, internal competition for resources sets in, and you are no longer just fighting the competition on the outside of the credit union, you are fighting competition inside," said Shobe. "It also gets harder from a management and leadership perspective, and you end up with too many high-level people and not the same level of productivity per person as you would if your organization were more focused."
One of the keys to DFCU's continued high performance is staying focused on the retail banking model, explained Shobe.
Pick A Lane & Stay In It
"We have stayed singularly focused on the individual consumer. Our staff knows exactly who the consumer is and there is no conflict in that singular viewpoint. All of our systems are developed to support the individual consumer and there is no tug of war going on behind the scenes as to whether some of the resources should go for commercial lending or something else.
"DFCU tends to perform faster and more efficiently because staff at the point of sale have no confusion as to who they are serving," continued Shobe. "This approach just allows you to run a leaner, more effective and efficient organization. It's very simple. I have studied institutions inside our industry and outside. Those that have failed share a common thread-lack of focus. You can only do so many things well. So pick your lane. Nothing is wrong with commercial lending, for example. But pick a lane and stay with it."
