In Texas, it's no secret that going big is the likely way to go in the Lone Star state.

It's here that one is more apt to find a cooperative such as the $6.7 billion Security Service Federal Credit Union that has a loan portfolio equal to the size of its assets – $6 billion.

The San Antonio-based financial institution recently celebrated that billion-dollar lending milestone with indirect auto loans being the clear leader making up 76% of the credit union's loan portfolio, said John Worthington, senior vice president for Security Service. The split between new and used vehicle loans is close at 55% and 45%, respectively.

“We were in the indirect business when credit unions were accused of being Communists for doing so,” Worthington joked. “Attitudes have changes. We have a business model that has worked successfully.”

Indeed, Security Service is the top ranked credit union indirect lender in the country, according to Callahan and Associates Inc. The credit union is also ranked first in auto lending among all financial institutions in the San Antonio area and in the entire state of Colorado, where Security Service has a growing presence.

“Because of our unique home equity laws in Texas, our credit unions tend to focus heavily on automobile lending, and Security Service has done a phenomenal job with indirect auto lending,” said Dick Ensweiler, president/CEO of the Texas Credit Union League. “Having reached the $6 billion mark, it's pretty clear that they have a system in place that works well for them.”

Worthington said much of Security Service's lending success comes down to a mix of practices that have consistently stood the test of time: conservative underwriting practices, an experienced team of professionals and a very strong corporate culture made up of employees who value their employer and the members.

Established in 1956 in San Antonio at Kelly Air Force Base with eight members and $25 in deposits, Security Service has grown into the largest credit union in San Antonio and Texas and the eighth largest in the United States. It has 37 branches in Texas, 19 in Colorado, and 14 in Utah.

Security Service said it reached its first million dollars in loans in 1966. Over the years, the credit union has steadily increased its asset size and expanded its operations, including acquiring or merging with 21 credit unions in Texas, Colorado, and Utah and consolidating them into the enterprise.

In the indirect lending space, the relationships that Security Service has built with dealerships have helped to grow the auto lending business, Worthington said.

“When things went bad and captives went out of business and others pulled back, we were there,” he recalled. “When you maintain consistency, dealers know you can count on them.”

When the country spiraled into a financial downturn starting around 2007 and into 2008, Security Service vetoed its recovery auto function, Worthington said. Instead of going after members who were not able to make their loan payments, the credit union offered several ways to help out including modification plans.

“These are loyal members who have been good to the credit union,” Worthington said. “We took the approach that they're good people out there that have had bad things happen to them. Our attitude was we need to contact those members who are having problems or are delinquent and then work with them to maintain their car or house.”

Those efforts appeared to have paid off. As of June 30, Security Service's loan delinquency rate was 0.78% and chargeoffs were 0.56%, according to Worthington.

With its vast open spaces, Texas is known for its commercial lending opportunities. It was here that the $1.4 billion Texans Credit Union built a commercial real estate empire securing deals worth millions both in and outside the state. It was also here that the cooperative succumbed to the weight of loan losses and fell into conservatorship in April 2011. The NCUA reported in May that Texans is on the road to recovery and turned a profit for the first time since 2007 after refocusing on consumer loans and shutting down unprofitable branches.

Ensweiler said credit unions throughout Texas weathered well during the economic recession, and stand poised to meet the financial services of their members and community.

Security Service, Texans' neighbor nearly 300 miles away, is growing its nearly six-year old commercial lending program methodically even though business accounts have been offered for quite some time, Worthington said. Currently, real estate and business loans make up only 9% of the credit union's portfolio with $140 million in loans. Security Service is also a SBA Preferred Lender, which means it can process and approve loans faster than the agency's traditional lenders.

Worthington said an experienced lending team has made the difference.

“It's apples and oranges with commercial and consumer lending,” Worthington said. “That's something some folks don't understand. Those that ran into problems may have overshot their headlights.”

Of those credit unions Security Service acquired and merged with over the years, some brought with them commercial lending problems, Worthington said. Again, the lending team had the expertise in place to mitigate those situations, he pointed out.

Security Service has an in-house lending group and also works with brokers, Worthington said. That combination has helped to secure deals such as a recent member-owned hotel in El Paso, Texas, which is thriving, he added. Even though there's a huge demand for new facilities in certain areas, the credit union will stick with its conservative commercial lending model. Members must still bring smart financials and solid business plans to the table, Worthington emphasized.

While refinancing numbers are up, overall, residential mortgage activity is still building, Worthington said. The credit union is testing out new systems and program to make the application and funding process easier.

In reaching the $6 billion in loans milestone, Security Service touts a recent marketing campaign that helped reinforce the credit union's reputation in its markets. Another area that gets overlooked is having a very competent workforce.

“They're the people that make things happen. The folks at the insurance centers and various points of contact – they do a terrific job,” Worthington said. “If you give them the tools to get the job done, they will be happier and more engaged.”

Security Service President/CEO David Reynolds and Jim Laffoon, executive vice president and chief operating officer, meet quarterly with the departments in Texas, Colorado and Utah to get feedback on how to do things better.

“There are a lot of moving parts to help make things successful,” Worthington said.

Instant Insights /

San Antonio Credit Union Drives to $6 Billion in Loans

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