from staff
When Terry West joined Jax Navy Federal Credit Union in 1988 as senior vice president of member services, the local financial institution had assets approaching the $400 million mark. That’s substantial growth, considering the credit union was founded 36 years earlier at Jacksonville Naval Air Station with 12 members and assets totaling $60.
West was named president and CEO in 1991, the year assets reached $500 million and since then the credit union has experienced impressive growth. By 2008, Jax Navy had become a community credit union and changed its name to VyStar. Assets had increased to almost $3.7 billion and membership had grown to 347,000 members who live or work in 15 North Florida counties, making VyStar the 18th-largest credit union in the United States.
VyStar has 30 branches, a call center down in Fleming Island, a headquarters, real estate and title companies on the Westside. The credit union has 151 ATMs and branches and just under 1,100 employees.
West learned about credit unions early in his life, joining State Employees Credit Union in North Carolina in 1977 when the bank where he had deposited his money since he was a child refused to loan him $200 because the loan was too small.
West graduated from North Carolina State University in 1976 with a B.S. in Mathematics Education and taught mathematics in public junior high schools and adult education programs in junior college until 1981 when he went to work for the credit union that loaned him the $200.
Since then, West has completed an executive program, “Strategic Planning for Growing Companies,” at the Graduate School of Business at Stanford University and the Harvard Business School program, “Making Corporate Boards More Effective.”
He sat down with the Daily Record editorial staff to discuss the current financial environment and how those conditions have affected VyStar Credit Union.
What’s the difference between a credit union and a bank?
It’s structural. A credit union is owned by all of its members and we have a little over 356,000 members. To be part of the credit union all you have to do is open a savings account and put $5 in it. As long as you keep $5 with us you’re always a member.
A bank’s mission is to serve its customers but banks are for-profit entities so their goal is to make money off their customers and pay the stockholders. Everybody who’s a member of the credit union has full ownership. At a bank it’s just the stockholders and everybody else is a customer getting services.
Credit unions focus on what money we make giving it back to the members in the form of low cost services, lower rate loans and higher dividends. We also offer services like branches, ATMs and Internet banking. “Free” is a big word with us. It’s a cooperative and it has blossomed into a full range of financial services.
VyStar began more than 50 years ago as Jax Navy Federal Credit Union and initially served only civil service and military and their families. What’s the membership like today?
We don’t know exactly what portion is military any more because we have so many members with a connection to the military through a parent or even a grandparent, but my calculation is that about 40 percent is directly or indirectly connected to the military.
In 2001, we moved from being a federal charter to a state charter. Part of the reason we did that was Cecil Field (Naval Air Station) closed and we felt we really needed to diversify our membership more. That year we also had 680 companies that we were serving but the military was predominant.
When we became a state chartered credit union we were able to offer membership to anyone who lives or works in 15 North Florida counties. Now our membership is a mixture of a little bit of everybody but the largest segment is still military-related.
The customers who come through your doors now range from people who experienced “The Great Depression” and are careful with their spending and investments to the credit card generation that may overextend itself at times. How has that changed your business?
We need to serve them both. We try to have the products that serve a wide spectrum of members. Our 356,000 members have varying needs. We try to be there for the people who are conservative and save and we try to teach the people when they get credit cards that they have to manage those credit cards. There are a lot of predictions right now that consumers borrowing habits are going to change permanently. I don’t know if that is true or not, but we are seeing more people focusing on saving rather than borrowing right now.
Speaking of helping customers manage their money better, how did the “Money Makeover” contest get started?
(VyStar chose four of its credit union members to participate in a contest airing on Ch. 47 where their goal is to reduce debt while increasing savings and, by participating in the contest, they will be learning valuable, practical money management lessons. The member who improves their financial situation the most will win $10,000.)
There is a government employees credit union in El Paso, Texas, that has done something similar. The goal is to help people find or learn ways to save money, better manage their debt, borrow more wisely. We saw some other ideas and came up with our own idea for a local TV show. We interviewed about 20 credit union members that were willing to be on the air and bare their financial souls and see what we could teach them. They each have a money coach, which are our branch vice presidents or supervisors. They look at, literally, every single thing those people do.
Our goal was to get it on the air to get more consumers aware that you really can rethink how you do business. Changing how you manage your money is no different than trying to lose weight on a diet. It’s a whole change in behavior. One couple, the Dunn’s, were expecting their first child and they ate out most of the time. Our coach, literally, took them to the grocery store and taught them about buying groceries and cooking. She ended up getting laid off right before their baby was born and she came on the air and told us that she didn’t know what they would have done if they hadn’t made the change and saved that money.
It’s been really successful in getting members to come in and ask for (Money Maker At Home Guide). It makes you list everything you do.
How does it make you feel, personally, that some of these programs are making a difference in people’s lives?
For me personally, this is just what I think is important. I’m a former 8th grade math teacher. I taught for five years and started working for a credit union in June 1981 as a loan officer one summer and never went back to the classroom. I like the concept of trying to help people’s financial well being. The motto of all credit unions is “people helping people.” I grew up very poor in North Carolina, first kid in the family to go to college. My parents were high school drop outs and I taught school because of that. It was good to get an education and for me, this is what you do that has meaning in your life.
Do you think the credit union industry is in a position to help people in the current recession?
Yes, I do. More people are beginning to look at a credit union as an option they want to consider. We tend to operate a lot more conservatively because it’s our members’ money. VyStar’s slogan is “We never forget it’s your money” and we take that very seriously. In the current situation people are looking for a stable organization and they are trying to find a place they believe in and have a say in where to put their money.
In one of VyStar’s latest financial reports, you say the credit union is “well positioned to successfully combat any financial instability which may lie ahead.” How so?
I think it goes back to the structure we have. We’re owned by our members and we really do focus on taking care of their money every day so we’re conservative in the decisions we make. We often will literally sit in the boardrooms in meetings and say “How is this going to impact our members long term and short term?” and ask if this is in their best interest. We maintain a solid capital level ... like anybody else, we’ve had more write-offs in this environment because we have people who can’t pay the bills who don’t have jobs. We’re No. 18 in size and one of the one’s in Florida that’s strong financially.
Does VyStar have a lot of small business accounts?
We have about 10,000 small business accounts. We do make business loans but they are very well secured. We’re not prepared to do inventory loans and we underwrite very carefully.
On businesses, what are some of the trends and attitudes you’re seeing from small- and medium-sized business owners you talk to?
I actually talk to individual members more than business owners. There are more small businesses that have trouble finding loans if they need them. It depends on what their business is ... if they’re selling a service to a consumer, a lot of them, frankly, people are not buying as much. They’re doing the same thing people are doing and cutting cost to keep profits at a reasonable level. We unfortunately are seeing more small businesses fail, but it depends on the type of business.
With fewer companies offering pensions and more people managing their own retirement funds, by themselves or with an advisor, are you more involved with offering products to help people save for retirement?
We are certainly seeing more people saving in money market savings accounts, CDs and IRA deposits. People are really trying to cut their overall expenses more than they have in the past. Health Savings Accounts (HSA) are something new that we are offering and we are seeing some positive trends in that people are learning how to manage their medical bills a little differently.
VyStar started a real estate sales division in April 2008. That was an interesting time to expand beyond mortgages. Why did you do it?
That division is not owned by the credit union. It’s owned by a credit union service organization and it’s a for-profit business. We had been working on getting all the legal processes done earlier but it ended up starting in 2008.
We did it because we do a lot of mortgage lending. The last number I saw through 2nd quarter, we were the No. 2 mortgage lender in the area behind Wells Fargo. We wanted to be a place where if members wanted to come to us to list a house to sell or find a house to buy they could come here to a trusted organization.
The real estate division has been growing slowly but it picks up business every month and it’s gaining momentum.
What’s your main competition? Is it other credit unions? Small local banks? National banks?
People often ask me that and I think it’s a little bit of all of them. If you’re a consumer you have choices everyday and I always tell our employees to remember every time they did deal with a member that they (consumers) have lots of choices, so give them the best level of service. That will shift in certain economies ... you’ll see some smaller institutions paying very high deposit rates right now, trying to gain market share and build capital. The question is, is that a good business decision?
Being 18th in the country with total assets of just under $4 billion now... Through all this, with the economy, where do you see those numbers in five years? Ten years? Top ten in the country?
We don’t look out and say top 10, we look out and say we want to continue growing for our members and focus on very steady, healthy grow ... You can grow too fast sometimes and we want to manage growth instead of your growth managing us. We want to be here and growing for another 50 years. We certainly want to grow, but we don’t get up every day and say “Let’s grow another 20, 30, 40 percent today.”
What in your opinion is in store for credit unions in the future?
I think the whole credit union industry has a very wonderful opportunity right now. We‘re very consumer oriented. That’s been our history and we don’t expect to ever change that. I think as people start deciding who they want to do business with we’re a great option for them.
We’re always looking for new products that will make sense to consumers. Years ago when we added debit cards a lot of people wondered why we did that. We did it because we thought people would want them and today it is the No. 1 way people transact business with us.
We have 229,000 members enrolled in Internet banking and about 110,000 actively use it. We have 72,000 members enrolled in automatic bill paying, which is a rapidly growing part of the business.
We also continue looking at our loan products and credit cards. We’re going to keep a fixed rate on our credit cards. We look at our products in terms of doing what’s best for our members all the time.