When Doug Fecher took the helm at Wright-Patt Credit Union, the first-time president had a daunting task ahead of him. The credit union was nearing $600 million in assets and Fecher had to decide, one, what would define the credit union under his stewardship, and, two, how his vision would encourage continued growth. The answer for this conundrum fell from the skies.
“Right as I became president, my wife and I took a vacation on a sailboat down in the Bahamas,” Fecher says. “I was looking up at the stars one night, trying to figure out, you know, brand new CEO, what did it mean? What was I supposed to do? And it dawned on me that, in the end, no one would care about the ROI that I was able to create or the financial strength of the credit union. But everyone would remember if people were better off because of Wright-Patt Credit Union. And it was on that sailboat that I decided we were going to be about taking care of people.”
The vision has steered Wright-Patt, which now tops $1.8 billion in assets, for the past 10 years. The idea is simple – and the very basis on which the credit union system is founded – but it has made a major impact on the Dayton area.
Federal employees working at Wright Field founded the credit union as F.E.U. 148 Credit Union, Inc., in 1932. In 1948, the name changed to Wright Field Credit Union and then to Dayton Federal Employees Credit Union in 1951. Finally, in 1962, the name changed one final time, to Wright-Patt Credit Union. Wright-Patt now serves more than 190,000 members across 1,100 employee groups and seven counties.
A key component to the credit union’s success is its definitive brand – Helping People Through Life. The credit union is not just a financial services provider. There are plenty of those in the area. Wright-Patt is different. It uses its financial offerings to differentiate itself, to make itself indispensible to the community. Every message the credit union sends re-affirms that commitment; it’s a bold notion the credit union markets wisely.
“Everything we do strategically is to differentiate ourselves,” Fecher says. The strategy is working.
In a market dominated by regional giants National Bank, Key Bank, and Fifth Third, Wright-Patt has a 4.5% market share in Montgomery County, up 25% from its June 2008 share of 3.9%.
With the closing of local GM and Delphi plants, then NCR’s announcement that it would move 1,250 jobs from Dayton to Georgia, the area has been hit hard by the recession. Unemployment in the Dayton area hovers near 13%. But Wright-Patt has a bit of security in its namesake employee group, Wright-Patterson Air Force Base.
“Our heritage as an air force base credit union is very important to us,” says Jeff Carpenter, vice president of membership and development. “I think the population over there is around 30,000 between civilian and military folks, so that’s a nice, stable field of membership for us.”
The credit union also has a solid relationship with Wright State University, which is located directly across the street from the credit union’s headquarters and has an on-campus Wright-Patt CU branch.
In addition to its locations on the base and campus, Wright-Patt has 23 branches – or “member centers,” as it calls them – throughout the Miami Valley as well as Cincinnati. Wright-Patt doesn’t just use words and phrases to talk the talk of being different, it embodies that differentiation…quite literally. In its branches, the credit union is rolling out a new strategy for member engagement. Dialogue centers are an evolution in financial services delivery channels. The locations feature an open floor plan and teller stations that encourage member-employee engagement. Data from Callahan’s Peer to Peer software suggests the concept could improve efficiencies within branches. Retrofitting existing branches to fit the dialogue model incurs one-time expenses; still, the credit union’s overall office operations and occupancy costs have declined over the past eight years.
Despite the solid relationships it has built with employee groups as well as the surrounding community, Wright-Patt has felt the pinch of the return of competition to the marketplace, a feeling with which most credit unions are intimately familiar.
“The banks are coming back into the market,” says Linda Stephens, vice president of consumer lending. “The market is tougher and our competitors are even stronger than they were before. However, I think true and steady wins the race.”
Indeed, the credit union stayed true to its members – both individual and commercial – when times were tough. It continued to lend and even dropped rates, which spurred economic activity. In early 2009, a rate promotion helped the credit union finance approximately one in five cars in the Greater Dayton market. The promotion also contributed to the credit union’s stable base of auto lending in its portfolio.
In its continuing mission to help people through life, Wright-Patt offers an array of services and programs that support its members as well as the community. Its participation in several CUSOs not only diversifies the credit union’s income but also ensures other credit unions can help their members through life. Being part of the larger cooperative CUSO network has tangible benefits. As of March 31, Wright-Patt reported a ratio of annualized Other Operating Income, which includes CUSO Income, to average assets of 90 basis points, nearly double the peer group average of 55 basis points.
To ensure would-be borrowers are ensured speedy approvals, the credit union uses an automated underwriting system, which underwrites approximately 43% of Wright-Patt’s loans. But an automatic denial does not equate an absolute denial. That’s the beauty of holding onto loans.
“We portfolio our consumer loans,” Stephens says. “Those are all held and managed by Wright-Patt Credit Union. We don’t sell those off.”
The credit union also doesn’t cut off its members from sources of credit when they need it most.
“We have not cut credit card limits or line of credit limits or home equity limits,” Stephens says. “Reaching out to members…sending out a letter or pamphlet, offering financial counseling, letting them know that’s available free-of-charge. Things like that can help.”
But don’t think the credit union’s approach to loan origination, income diversification, and open communication with troubled borrowers are signs the credit union is reckless. Quite the opposite, in fact. Consider its current delinquency ratio of 0.99%, which is essentially half of its asset-based peer group of all credit unions over $1 billion. This measure of asset quality, however, may be as much a reflection of regional moderation, as all credit unions over $500 million in West Virginia, Kentucky, Ohio, and Indiana posted a moderately higher rate of 1.11%.
Ultimately, the credit union approaches it lending programs in the same way it approaches everything else. With the question: How will this help our members through life? It’s that approach that creates value in the credit union and sets it apart from competitors.
“I think long term to survive in this very competitive market [credit unions] have to be able to clearly articulate that difference, and it’s not just a few basis points,” Carpenter says.
It’s not a few basis points. It’s bigger than that. It’s the dedication to help members through life, which starts by helping its own employees. When Fecher became CEO, he introduced a new model of decision making. The model is based on the premise that there are three stakeholders in Wright-Patt Credit Union: The Members, The Employees, and The Credit Union. It’s a concept that is ingrained in Wright-Patt’s employees from Day One, and it permeates the company culture.
One way the credit union takes care of its members is by offering a patronage dividend. It also encourages smart saving habits through programs that incentivize even small savers. Helping people through life, that’s the Wright-Patt way.
“It’s not about checking accounts and car loans,” Fecher says. “Those are just the tools. People are better off because of Wright-Patt Credit Union. And that is the brand and that is what we try to do here.”