About five years ago, Fort Knox Federal Credit Union moved about $180 million into investments paying just over 5%, and locked that money in for five years.
It was a dramatic shift. The previous investments had been paying more, so at the time it might not have seemed a sensible move. Looking back, it could well be described as the right move at the right time, helping shelter the credit union from what is now called the Great Recession.
It’s all part of what Fort Knox FCU President/CEO William Rissel describes as doing things “the old-fashioned way. We go out and earn it.” At a time when margins have been sliced, the credit union has earned a strong return on assets.
“First off, we in Kentucky have not been as dramatically affected [by the struggling economy] as some other areas. We do have over 9% unemployment, but we don’t go through the same booms during good times, and we don’t go through the busts as much during bad times.”
“We work very hard at keeping our operating expenses down, so when you combine the asset-liability management piece of it with controlling operating expenses we’re able to pay our members market rates or above market rates, charge them below market rates and still make a really good ROA.”
At the same time, Fort Knox FCU is constantly looking for new markets and moved into commercial lending to help balance too much liquidity, a situation familiar to many credit unions. Four or five years ago it began offering commercial loans and expanded that activity a couple years ago.
Rissel sees it as an area where the credit union can help existing members who own businesses and also offer business products to people who have business accounts with community banks. It’s an opportunity to write more loans, he said, and he likes the fact the loans come in larger amounts and generally reset every three to five years. That will let Fort Knox FCU ride interest rates up.
It’s the opposite of what the credit union did when interest rates were high and the credit union expected them to drop. On the liability side, Fort Knox FCU is locking in member deposits, using rates as an incentive, for longer periods of time. That’s especially true of CDs.
“As rates go up, our cost of funds will rise slower than our yield on assets,” Rissel projected.
Since Rissel became CEO in 1991 the credit union has grown from $125 million in assets to more than $1 billion and from four branches to 14. NAFCU has named Fort Knox FCU credit union of the year, and it has twice been selected best credit union serving the U.S. Army.
Challenges? Of course. High on the list, Rissel said, is how to continue to innovate and keep a strategic advantage. Another issue is deciding what the credit union should do and shouldn’t do when examining what seem like millions of opportunities.
“Given limited resources, we know we can only do some of those things,” he noted. “One of the challenges is ferreting out what are the best opportunities and not spending resources on things that in the long run would not be the most productive for us.”
The credit union hasn’t shied away from modern technology, and it has earned recognition for being the most popular credit union on Facebook.
“The marketing department did several campaigns about understanding the value of social media,” Rissel said. “Like a lot of things in marketing, you ask if there is a payback. We did some promotions on Facebook before some of the rules changed, and we were able to get a lot of member activity.”
“The promotions were not designed to be turned into financially profitable transactions. They were more aimed at embedding the credit union and its philosophy.”
As credit unions become larger, Rissel suggested, they may start looking more like banks. But one example of the credit union movement at work occurred in 1995 following the bombing of the Alfred P. Murrah Federal Building in Oklahoma City.
Federal Employees Credit Union–now Allegiance Credit Union–was located in one of the most devastated parts of the building. Fort Knox FCU sent 16 employees at its own expense to work in that credit union for six weeks.
Perhaps part of the determination Rissel exhibits reflects the fact he is part Seminole, a tribe that has never surrendered. Even so, as a University of Florida graduate, he roots for the Gators even when they’re playing the archrival Seminoles from Florida State.
He graduated during the Vietnam era and had enrolled in ROTC, so he fully expected to be sent to Vietnam. Instead, he found himself assigned to NATO in eastern Turkey.
When he re-entered civilian life he found a job in retail credit with the W.T. Grant chain. He earned an MBA with honors from University of North Florida. He also graduated with honors from the American Bankers Association’s Stonier Graduate School of Banking at the University of Delaware, the first credit union executive admitted to that program.
Both Rissel and his wife love sailing, and recently chartered a 40-foot sailboat in the British Virgin Island. He also works on stained glass.
If you were to visit FKFCU five or ten years from now, you probably wouldn’t find Rissel there. He’s nearing retirement. But he hopes some things will remain in place.
“I would hope the things that wouldn’t change would be the basic fundamentals that have made us strong,” he said. “Those things are understanding that overseeing operating expenses is one of the most important things you do, and being willing to make hard choices to keep those under control.”
“The second thing I would hope is we’re competitive in our products and still finding new ways to serve members and balance our members’ interests with the credit union’s interests.”
About Fort Knox FCU
Assets: $1.01 billion
Primary sponsor and SEGs: Civilian and military serving at Fort Knox and people who live or work in central Kentucky. 400 SEGs.
Capital-to-asset ratio: 13.03%
Loan portfolio: $609 million
Employees : 218
About William Rissel
Married, two children.
Graduate of University of Florida and University of North Florida.
CEO since 1991.