Focus On Lending Helps CU Double Membership

Register now

FRANKLIN, Tenn.-Southeast Financial CU has nearly doubled its membership and assets over the last five years by putting its employees-and loan program-first.

The credit union is 90% loaned out, which is driving a high margin (4.9 percentage points) and allowing the $420-million, 61,500-member CU to pay above-market employee salaries to attract the best talent, according to Jeff Dahlstrom, EVP/COO. "We like to say members first. But in reality it is employees first. We take care of our employees through good benefits and higher-than-average pay, making sure they are happy and satisfied. Satisfied employees take better care of members."

SFCU pays in the 75th percentile of CU salaries nationally, according to Dahlstrom, who noted the credit union has been voted one of best places to work in Nashville for the last several years. Dahlstrom contended that paying more allows the credit union to be selective and get high-caliber employees, leading to greater efficiency. "And, even though we pay more, we are saving money on turnover and training costs," Dahlstrom added.

Results support the strategy, with SFCU regularly scoring 6.5 out of 7 on the credit union's annual member satisfaction survey. The credit union also averages just under three products per member.

With lending behind SFCU's ability to pay higher salaries, the addition of business lending and a program to provide educational loans to nurses are supporting loan growth, which was double digits from 2007 to 2009. Special offers, too, have boosted volume, like an auto loan recapture effort last year that gave members 1% for a one-year term, 2% for two years, and 3% for three years. "It was a bit of a loss leader, but overall it gave us loan growth and many of these same members have come back to the credit union for their next car loan," Dahlstrom said.

Just under $50 million of the credit union's loan portfolio is in a loan program for nurses studying to receive college credit to become an RN. Created in 2004, the program is affiliated with Indianapolis-based The College Network, which provides online training for nursing students and also guarantees the loans. "We have done about $180 million in loans in this program since we've had it," said John Jacoway, EVP/CFO. "Rates are in the 12% range and most loans are for $6,000."

Both Dahlstrom and Jacoway credit CEO John Simmonds for developing the CU's strategies.

For reprint and licensing requests for this article, click here.
Growth strategies
MORE FROM AMERICAN BANKER