SEATTLE — Nordstrom FCU celebrated surpassing the $50 million mark in March of this year, but just because it's not technically a "small" credit union anymore doesn't mean there aren't still plenty of challenges.
CEO Shelli Millhuff came to Nordstrom in April 2013 following Watermark CU's merger with Sound CU, which created geographic issues for the 28-year credit union veteran.
"It was definitely a shock going form a large-budget credit union to a very small, under $50 million credit union with a limited budget and income," she told Credit Union Journal recently. Her first task, she said was to evaluate what needed to be done to help the credit union grow and bring it into the future.
"We had to invest some serious money into IT improvements, specifically our website," she explained. "Our credit union's base is obviously Nordstrom; we're a single-sponsor credit union that serves the whole U.S.... Our main branch is our website, so we needed to make a better presence on our website and let Nordstrom employees know we're here, easy to use, easy to access, we have mobile banking functions, all of our loan applications come through the website and that's our main vehicle."
Part of that process also involved redesigning the CU's logo and website to come up with something simple and sophisticated, yet also recognizable. Because Nordstrom puts such an emphasis on style and fashion, that meant ensuring that the CU's logo and web presence reflected that.
But more than just a facelift was necessary, said Millhuff. Not long after she joined NFCU, the credit union's SVP retired, enabling Millhuff to bring in a new SVP "who is obviously my right arm," she said.
"She's embraced IT and member service and digging into the trenches of rebuilding the processes and education for the staff that's here," said Millhuff. "We really needed to spend some time and money on training our staff and bringing them to the next level."
Additionally, a new VP of lending and collections was brought in, and under him the CU's collections have improved and chargeoffs have declined.
Reintroducing the Credit Union
One achievement Millhuff is particularly proud of is attracting 900 new members to the credit union in the last two years — no small feat for a credit union where membership today stands at 7,000 members. One of the biggest challenges the credit union faces, she said, is making sure that all employees understand the CU is there for them. One tactic she has taken is to revitalize NFCU's in-store awareness efforts, reintroducing the credit union to employees through brochure racks in store HR areas, along with engaging Nordstrom employees via the company's intranet, newsletters, and more.
The onboarding process has also been streamlined, with MSRs taking a member service approach rather than acting as "order takers," said Millhuff. That means being more of an active participant and engaging with members to make sure they're being educated on the products and services the credit union can offer.
"That's a bit of a culture change here, which is very exciting for senior management," she said. "I don't talk to and coach and develop our people as sales people; We coach and develop them as partners, because we need to partner with the members to make sure they're aware of the services and benefits of Nordstrom FCU and how we're different form other financial institutions in partnering with them and helping them have a good strong quality of life with the benefits of a credit union."
Money Matters
Though the credit union's net income was $7,000 in the red for 2011, the last three years' net income has averaged $131,000, and its Q1 Call Report reveals that 2015 is on a similar track so far. Lending has remained steady in recent years, always hovering at about 2,300 loans on the books totaling $18 million or so. More than half of the credit union's loans are in new and used auto lending, though other bread-and-butter products like credit cards and signature loans are also utilized.
"We were excited in January to hit $19 million — that was the first time in five years that we hit $19 million," said Millhuff. "One of our challenges is loan payoffs. Nordstrom is known for being a very generous employer and like many Northwest companies, their employees have bonus programs. When our members get extra money, they often pay off their loans. This is great for the member, but not so good for our loan growth numbers. You'll see our Call Report has an influx of deposits and an influx of loan pay offs right after bonus time."
One way the loan department works to protect against that is by talking with members at the time of a payoff in an attempt to catch more loans.
"We know we won't stop the payoff, but we want them to choose us the next time they need a new car or another new loan," she said.
Nordstrom FCU has also taken measures to cut expenses, choosing a new IT support provider, renegotiating vendor contracts and eliminating duplicate services in areas where the CU's core system could perform functions that were being outsourced to third-party vendors.
Crossing the Threshold
While Millhuff and her staff are pleased to have the $50 million threshold in the rear-view mirror, she said the distinction isn't particularly meaningful to the way the credit union does business.
"We're thinking like a big credit union rather than a small credit union," she said, noting that all of her executive team has experience at "large" credit unions, and may internal policies have been rewritten to be more in line with those of their larger counterparts. "We're preparing ourselves for that and not taking advantage of [NCUA's Office of Small Credit Union Initiatives] at this time. My opinion is that it's kind of exciting, but on the other hand it doesn't really affect us, because we're already prepared to be larger."
