Loan Strategy Makeover

San Francisco Federal Credit Union increased loan volume 12% by identifying shortcomings within both the institution and market.

Yun Ma

By Yun Ma


San Francisco is one of the country’s most progressive cities, and San Francisco Federal Credit Union ($827M, San Francisco, CA) is catching up to the city’s forward-thinking spirit. Five years ago, the co-op brought on new CEO Steven Stapp, whose hiring set off a series of changes that included a complete rebranding across all channels.


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Its shift in attitude has helped the 59-year-old credit union achieve renewed growth in several categories, particularly loans. Rebecca Lytle, SFFCU’s senior vice president of lending, revamped the co-op’s approach to lending when she started with the credit union three years ago. In 2012, SFFCU booked $112.8 million in loans, a healthy 12% jump from the previous year, and loans accounted for 61% of the credit union’s income. Much of that growth is attributed to real estate, $61.4 million, and business loans, $29.1 million. Historically, the co-op’s real estate loans consisted of 95% refinances; now, it is evenly split between refinances and purchases.

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“The rise in business comes from new loans,” says Rebecca Lytle, SVP of lending. “We don’t advertise, at least not right now. It’s all referral, return business, because we’ve focused on that member experience.”

Such service seems to go a long way. As Lytle will be the first to admit, “We’re not the lowest rate in the market. We don’t compete on price. We do it on service.”

As it turns out, that service combined with a new loan application process, task prioritization, and openness to new business ventures has helped the credit union establish its place in the market.

Create An Automated, Interactive Application Process

When a member first applied for a loan, San Francisco Federal Credit Union historically had him or her complete what Lytle calls the “10-pound real estate package,” or the usual 40 pages of paperwork associated with taking out a loan.

“We did not have any centralized lending and there was really no lending automation,” Lytle says. “If a member applied online, it was a snail mail application. You had to print it or fill it out. You could email it back. But it didn’t give you a decision. It didn’t talk back to you. It wasn’t interactive.”

So Lytle and her team replaced the old package with an online mortgage application in December 2011, followed by an online consumer application six months later. The online component not only serves as an application tool but also helps members explore options for the type of loan they want. It even lets them search and play with rates and look at the costs of different scenarios.   

In a tech-savvy area like San Francisco, members immediately embraced the responsive, interactive online application.

“If you could see the graph when we launched our online application, in a very short period of time our volume doubled,” Lytle says.

Prioritize Tasks, Outsource The Minutiae

Traditionally San Francisco Federal Credit Union’s bread and butter in the housing marketing was fixed-rate 30-year mortgages — which just wasn’t going to cut it in the Bay Area’s cutthroat housing market.

“We were plain vanilla,” Lytle says. “We needed a different set of products. To do that though, we needed to shore up our ability to service our loans.”

To expand its range of products, Lytle needed her employees to focus on originating loans and giving their all to the member experience instead of filling out paperwork and getting stuck in back-end servicing processes. The solution? Lytle and her team outsourced some of the secondary servicing tasks.

Another time-consuming issue was the volume of refinancing paper.

“Rates would go down, members would come back and want to refinance,” Lytle says. “You don’t want to lose the loan, so you refinance. We spent a lot of time refinancing our own paper.”

To prevent refinancings from eating up employee time, Lytle introduced a one-page document that reduced the rate and payment without forcing the employee to go through piles of paperwork.

“It freed up our people from doing our own internal refinances to bringing in new money,” Lytle says.

Plus, the willingness of the credit union and the ease of the process engendered goodwill with members.  

Jump At Unlikely Opportunities

In 2010 the city of San Francisco sent out a request for proposal to all financial institutions to help develop a financing program for taxi medallions. The interest was tepid. At the time, the economy was struggling and most financial institutions were not in the position to extend themselves to new business.

In such an urban, environmentally conscious city like San Francisco, with its surplus of transit options, from BART to MUNI to bicycle-friendly streets, Lytle and her team knew they couldn’t count on auto loans to pump up their loan volume. Taxis, however, were a different story. So the team worked with the city to create a funding program for taxi medallions. 

“We fund the purchase of taxi medallions, which is a very different market than any other taxi market,” Lytle explains. “You have to be a driver to own a medallion, so it’s providing a way for the individual driver to own his own business. We look at it as funding a small business owner.”

These days, San Francisco Federal Credit Union provides funding for approximately 98% of the taxi market. In the two-and-a-half years of the medallion pilot program, the credit union has loaned $50 million. The credit union and the city are working to transition this into a permanent program, and the credit union has secured another $50 million exclusively for taxi medallions.

“It’s important to look at opportunities,” Lytle says. “It might not be something you have on the shelf, but we’re all looking for a niche or something that differentiates us. Because we were willing to look at the opportunity and invest the time, it has reaped rewards for us well beyond any loans we could have done.”

Next year, San Francisco Federal Credit Union will be celebrating its 60-year anniversary. Between streamlining processes for both members and employees and tapping into a new market, Lytle and her team have set up the credit union for its auspicious next phase.




April 2, 2013


  • Henry - the point of the article appears misunderstood. The primary purpose of the article was to share our practices that lead to improvements in our lending application and process, expansion of new products, and looking for new opportunities. As you stated approx. 67% of our loan portfolio are 1st mortgages, but that one statistic doesn't tell the whole story. What you failed to tell is that San Francisco FCU's net long term assets to total assets ratio as of 12/31/2012 is 37.1% compared to Safe CU's ratio of 39.6%. We share the same concern as many others about rising interest rates and have employed (and monitored) a strategy utilizing our investment portfolio that mitigates interest rate exposure. Your claim that you "doubt" we have mitigated this risk is simply unfounded and false. We employ both a robust interest rate sensitivity and credit risk analysis utilizing a third party. We calculate both short term and long term impacts and a deeper comparison of our statistics would reveal that the San Francisco real estate market has performed very differently than the Sacramento area. In conclusion, I don't know how sharing improvements to the lending process, expansion of products, and expanding into new markets is setting a bad example for the industry. I would be happy to discuss with you our interest rate sensitivity strategy and credit risk mitigation process at greater length.
    Steven Stapp
  • Althea - a taxi medallion is a license to own/operate a taxi, usually found in metro markets such as New York, Chicago, San Francisco, etc. The local transportation authority regulates the number of medallions that are available.
    Steven Stapp
  • Risk with forthought!
  • I am amazed that given the high concern among regulators and CEOs about interest rate risk you would profile this credit union. As of 2012 year end they had 67% of their loans in first mortgages. I don't know of any credit union that has hedged interest rate risk so I doubt they have done that. On the other side of the balance sheet they have two thirds of their deposits in core deposits (MMA, regular shares and share drafts). I expect more careful analysis from Callahans than this. It appears that lately your articles are promoting what I consider to be bad practices. At least on the surface it appears that many of the credit unions you profile are taking outsized risks. I know we have to meet member needs and we have to manage risks. But when there is no side story to show that they are managing the risks and measuring the risks and that the risk/reward is calculated--I fear you are setting bad examples.
    Henry Wirz
  • I enjoyed this article which gave me some good ideas for my credit union. What is a "taxi medallion"? It would help me understand that aspect of the article. Thanks.