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Navy Fed Credit Union Finds Strength in Area’s Military Personnel

NAVY FEDERAL CREDIT UNION

CEO: Cutler Dawson.

Assets: $47 billion.

Net income: $475 million for the first nine months of 2011; $350 million for the first nine months of 2010.

No. of local branches: 22.

No. of local employees: 450.

Headquarters: Vienna, Va.

Year founded: 1933.

Company description: Federally chartered credit union.

Key factors for success: Branches near most bases; once a member, always a member.

The presence of the U.S. Navy and U.S. Marine Corps in San Diego hasn’t been lost on Navy Federal Credit Union.

The world’s largest credit union, with more than $47 billion in assets and 3.8 million members, counts a big chunk of that number locally, and now has 22 branches in the area.

That number will rise by at least two this year, along with improvements planned to other offices, said Cutler Dawson, chief executive of the nonprofit who was in town this month visiting various offices.

Dawson said Navy Federal is growing in several key metrics, notably membership, thanks to higher levels of service and better pricing on loan products. As it grows, the credit union wants to ensure that members can conveniently access those services.

“Our goal is to have branches within 20 minutes of members,” he said.

The credit union that was first organized in 1933 to serve enlisted, retired and Navy civilian employees opened up its charter some four years ago to current and former employees of the U.S. Army, U.S. Air Force, Marine Corps and other U.S. Department of Defense agencies, capturing quite a few workers from those ranks.

Of the 400,000 new members it gained last year, about 100,000 came from the ranks of other services, Dawson said. The credit union has about 301,000 members in the county.

Building New Offices

Dawson said Navy Fed will likely open offices this year in North County and Lemon Grove. The credit union also plans to renovate several existing branches in the region, including one at the 32nd Street Naval Base (which he said is about the size of a broom closet) and another tiny branch at Marine Corps Base Miramar that is housed in a trailer.

“We’ll be building new offices at both locations that will have between 4,000 to 5,000 square feet,” he said.

The credit union added 11 branches last year, bringing its total to 221, said Dawson, a former admiral in the Navy who was stationed in the San Diego area and still keeps a house locally, which comes in handy when visiting for business.

Navy Fed increased its footprint in San Diego in late 2010 after it assumed the assets of USA Federal Credit Union and its 18 branches, including eight in the county. The latter institution was on the brink of failure after its capital levels fell below mandated minimum levels due to a tumult of defaulting mortgages and other loans that soured as the economy dived starting in 2008, according to the National Credit Union Administration. Navy Fed also retained practically all of USA Fed’s 200 employees.

Dawson said last year was a busy one not only because of its physical expansion, but because more members seem to be using the services more often.

“Our existing members are doing more things with us and I think that’s because they trust us. We try to be more precise with our pricing so that they know what they are getting,” he said.

Navy Fed made about 8,400 new mortgages and some 14,000 refinanced mortgages. It originated $5.3 billion in mortgages, about 10 percent above what it did in 2010, Dawson said.

The two next highest lending segments are consumer loans, which include auto and personal, and credit cards, he said.

Not the Only One Growing

Marla Shepard, chief executive for California Coast Credit Union with about $1.6 billion in assets, said that while Navy Fed is much larger and can be aggressive on its pricing of products, she hasn’t seen any noticeable member defection from her financial institution.

“They have a more specific field of membership in which you have to be in the military or employed in it or have a family member employed by the military,” Shepard said. “We have a community charter which allows anyone who is a resident of the county to become a member.”

Practically all credit unions saw gains in their membership last year, especially after some of the nation’s largest banks raised fees on such things as debit cards, Shepard said.

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