Founded in 1931 to serve CUNA and CUNA Mutual employees, Summit Credit Union ($1.9B, Madison, WI) has stayed true to its original SEG group while expanding its community presence throughout its home base as well as in surrounding counties and Milwaukee. The credit union serves roughly 130,000 members as of first quarter 2013.
Much of the credit union’s 1.3% ROA and 4.2% annual loan growth — which includes double-digit increases in fixed first mortgage, new auto, and unsecured — is attributable to the concentrated efforts of its branch staff.
According to Callahan & Associates’ Peer-to-Peer analytics, the credit union’s 357 employees serve an average of 363 members each compared to an average of 414 for institutions with more than $1 billion in assets. However, each employee also annually generates nearly $800,000 more in loan originations than employees at similar-sized institution.
With outstanding growth metrics and a stabilizing marketplace, Summit’s eye is turned toward branch opportunities, including the renovation of existing locations to expand their impact and sales potential. Summit’s 24-branch footprint already includes several examples of non-traditional locations, including an inspiration branch designed as a brick-and-mortar billboard for the life goals Summit can help its members achieve, as well as one mortgage-oriented mini branch with a second one on the way.
Below, CEO Kim Sponem talks about Summit’s innovative branching strategy.
Tell me about some of Summit’s recent successes and how they play into your branching strategy?
Kim Sponem: During the financial crisis, we were successful in leveraging our mortgage operation. We sell directly to Fannie Mae and have also had a servicing capability for several years now. Last year alone, we saved members more than $2 million dollars collectively compared to what they would have been paying at a Wisconsin bank. During the recession, we became the No. 1 mortgage lender in Dane County.
We’re currently expanding our mortgage operation into other markets through home loan branches. It’s a concept we developed a few years ago that’s mirrored off of the Edward Jones model — two people in a retail office, primarily doing mortgage loans. Our first home loan branch opened in Sun Prairie in 2008, and we’re launching a second one in Watertown.
For these branches, we look for communities that don’t have a credit union but have high home ownership levels, a decent five-year projected growth rate, and a higher-than-average population of those in the 25- to 50-year-old age group.
The Many Faces Of Summit's Inspiration Branch
Photos Courtesy Of Summit CU
Where does Summit see value in continuing to invest in its branch footprint?
KS: Our branch footprint is valuable for building brand recognition in new markets, as well as increasing access options for our membership. Even with all the technology available in the banking world, members still ask us for new locations frequently. We generally look for locations that will add convenience to existing members while having good potential to attract new members. The technology and branch footprint really complement one another in our business model.
How has branch staffing changed over time?
KS: We’ve started looking much more for sales opportunities. When branch interactions happen, we’re focused on what we can do for the member from a product or needs-based standpoint. Our branch teams are focused on lending, have a much deeper understanding of products, and also have significant underwriting experience. We do decentralized underwriting, so it’s important we have seasoned lenders in every location. All of our locations are also capable of doing consultative, financial planning-type functions.
Our inspiration branch and one other location were the pilots for our universal employee positions. One of the things that always bothered me about traditional branch staffing is it’s hard to guess when spikes will occur — your teller line might be busy while your lenders or new account staff aren’t. The universal position helps even that out.
It’s more challenging to find interested employees. It helps to look for employees who want variety in their workday and want to interface with people in a lot of different ways. The training is longer and more onerous, but there is a bit of financial benefit for the employees. The credit union is essentially paying more than average for some activities and less than average for others. We’re still piloting this, but there’s a lot of merit to it and I hope it will be a good feeder into branch management.
What are your key performance indicators for your branch scorecard today?
KS: We track overall products and services per member, of course, but the branches also track products and services per new member. We’re tracking that on a go-forward basis because it takes a longer time to influence our overall membership. How we’re treating those incoming members is especially important.
We also track checking accounts, new members, and loans dispersed — including products that go along with that such as GAP insurance — as well as Net Promoter Score (NPS) and turnover by branch. Transactions and loans are also tracked per member service representative.
Have you always adjusted your vision and expectations for each location?
KS: Our strategy has always been location driven, but within that, one trend we’ve started to embrace is smaller locations. Now we typically look at around 3,000 square feet instead of 6,000 plus. A 6,000-foot branch has an advantage when it comes to visibility, so the challenge for us is to make sure the design of our smaller branches is engaging enough to attract the desired traffic. We’re doing more stand-alones right now, although our home loan branch is in a strip mall. If we go into a strip mall, it’s usually because it’s a new market and we want to gauge the success of the branch for a couple of years before making the capital commitment to a stand-alone.
Tell me about the inspiration branch. What issues were you trying to solve or what opportunities were you trying to uncover?
KS: Over the past few years, we’ve done a good job being a financial resource for our members, helping them map out where they want to go and how they can get there. As we were building out these resources, I was thinking about how to get our members to think more about their dreams and goals. When you’re a kid, you’re always thinking about what you’re going to be when you grow up. So I thought, “How can we get adults to stop and think about where they wanted to go or the things they wanted to do?”
I had toured a company that made equipment for the film industry, and when you walked into its building, it was like you were walking into a theater set. We began looking at those set pieces as a way to create visible, tangible reminders of the dreams and goals people have — such as going to a university, taking a trip to Europe, purchasing a new vehicle, remodeling their perfect kitchen, or buying their dream house.
So our waiting area at the inspiration branch became a sandy beach, and we built meeting spaces onboard a plane, under the tower of Pisa, and in an English pub. Members now stop and say, “Oh yeah, we’d always wanted to do that,” or “I need to start saving for that.” They’re thinking about those dreams or identifying new ones, and we’re there to help make them a reality.
Why this branch? What was the cost (dollars, employee hours, etc.) of the renovation?
KS: Our Fitchburg branch was built in 2001, so we needed to update it anyway. The location has the perfect interior — high ceilings and a big lobby area with several offices on the outer perimeter — so it was structurally suitable for what we wanted to build. There’s also natural lighting, which keeps things bright. Lastly, the branch manager was excited about being a pilot for the universal employee concept, which is something we wanted to emphasize in this location.
The great thing is, the pieces are designed like theater sets. We can do this with another location and swap around the sets to keep things fresh.
We asked an architect to draw things out, and then we had a contractor and the theater set company build the pieces. The total cost for the renovation was around $400,000. The great thing is, the pieces are designed like theater sets. We can do this with another location and swap around the sets to keep things fresh.
We’ve only had about three months to determine the impact of the renovations, and right now the biggest boost is in foot traffic and brand awareness. We’ve hosted a lot of community events and leaders here.
Are there any new construction, renovation, relocation, or other branch investments on your horizon?
KS: We do a lot of piloting at individual locations, both in the inspiration branch and others, before we implement anything across the entire footprint. We like to test a lot of things, but in a lower cost way so that if we do fail, we fail fast and fail cheap.
We’re certainly not stuck in tradition. We’ve looked at mobile branches in the past and are now considering kiosk-based branches in some locations, but it all depends on what problem we’re trying to solve.
With 24 locations, there’s almost always a branch that needs updating. For example, we just tore down a building in Milwaukee and rebuilt it from the ground up. But right now, we are primarily looking at new branches as a way to expand into additional markets. In Dane County, we’re the second largest financial institution in terms of market share for deposits. There’s always room to grow in our existing footprint, but now that we’re out of the recession, we’re planning for a couple of new locations every year.