VIENNA, Va. -- Cutler Dawson, president/CEO of Navy FederalCredit Union, does not shy away from talking about the big issuesof the day in credit union land.

He spoke candidly recently with Credit Union Times during aninterview about issues ranging from trade association politics toconversions to membership growth. As a member of NAFCU's board, thehead of the world's largest credit union said he absolutely seesthe need for two separate national trade associations with onespecifically catering to federal charters. However, Dawson pointedout, "We also belong to CUNA. We think both organizations do a goodjob of representing credit unions. And, we also think, they're mostpowerful when they work together. They're most powerful when theyspend their energy working the issues affecting credit unions andnot intra-trade organization issues."

In the political arena generally, he said the credit union takes"an individual approach...As a credit union, we don't campaign orendorse any particular candidate." He said he has met with localcongressmen as well as key lawmakers regarding credit unionlegislation. "I also think that NAFCU and CUNA both do a good jobof representing our interests on the Hill," Dawson said.

NAFCU has been working closely with the bankers on some issuesthat the two sectors of the financial services industry have incommon, such as data security, a tactic CUNA seems to be carefullydistancing itself from. "I think that anything we work on that hasthe best interest of our memberships at heart is a good thing,"Dawson commented.

One issue that the trade associations have been fairly united onis proper member disclosures in the credit union-to-mutual savingbank conversion process. On this matter, he said, "Credit unionsneed and should have the right to do what they want with the creditunion and a decision to convert should be with their members' bestinterests and not a small number of board members or executives."However, Dawson added, he had not seen a good one yet though heexplained that does not mean it is impossible either.

He cautioned credit unions to approach courtesy payprograms--which Navy Federal does not offer--"carefully" anddenounced payday lenders, an increasing source of debt for servicemembers. "We like to think that we offer a number of alternatives,like that $300 loan, like a line of credit on our checking accountsbut I believe that payday loans are a spiral of doom," he said.These lenders enjoy increasing popularity despite credit unions'and others efforts to fight them off; Dawson said credit unionsmust push on with member education, understanding, patience, andteaching the difference between needs and wants.

Aside from these challenges, Navy Federal, due to its size andgeographic diversity, has concentrated a great deal of energyfocusing on compliance with the infamous Bank Secrecy Act. "It is achallenge and we worked on that real hard in '05 and '06," Dawsonstated. "We automated a great number of systems to support thatwork. We hired some new positions, created a new team to monitorthat and I think we've been very successful." Navy Federal beganits Financial Crimes Enforcement department last year and has 10staffers there working on BSA alone.

Being the largest credit union, $26.3 billion Navy Federal givesback to the credit union community on tough challenges like BSA."We've also offered other credit unions, if they need some help oradvice on how to set that up, we're happy to help," Dawsonsaid.

That is not just on BSA, he noted. Mentoring "started longbefore I got here...I'm very proud of that fact. Our rule of thumbhere is, if anyone asks for help or information, we'll tell themwhat we know."

For Dawson, a retired vice admiral, since he is no longer in theNavy, this is the place to be. "I miss the people in the Navy," hesaid. "There is no greater excitement than leading a team at seawhether it be a battle group or fleet, but you can't do thatforever and there's lots of other people that want to do it too.But this is great what I'm doing here--I get to keep my ties withsailors and Marines, just in a different way." Dawson went straightfrom the Navy, during which part of the time he served on the NavyFederal Board, to head up the credit union when Brian McDonnellretired at the end of 2004.

"I learn every day in this job. It's been a pleasantsurprise...I think I'm pleasantly surprised at how much I'veenjoyed doing this," Dawson, whose two-year anniversary at NavyFederal will be Dec. 19, said. "I've gotten to share in theaccomplishments of Navy Federal over the last two years becausethey've been accomplishments of the whole team and I've beenprivileged to be part of it."

The credit union has really homed in on bolstering memberservice. Navy Federal added nearly 1,000 new positions during 2006,a 20% increase, and plans to add more than 1,000 employees nextyear. The Pensacola call center was home to 360 of those andanother 174 were added in the call center at the headquarters with"tremendous results." Calls are answered in about 15 seconds,according to Kathy Fish, who manages the call center, and the callsare routed to the proper departments in an average of 71seconds.

"I've been really pleased in how we've been able to take thosepeople aboard from recruiting to new employee training to newposition training to get them up to speed to provide the memberservice that we want to do," Dawson commented.

It is all about the membership, he added. "We see the demandfrom our members. Our membership fortunately continues to grow.Last week we just went over 2.8 million members and we've renewedour commitment to grow with them...What we found is when you answerthe phone, people take out more products." Navy Federal's callcenter handled one million more calls in 2006 than the previousyear.

Additionally, Navy Federal plans to open 70 new branches overthe next five years. "We've seen that every time we open a newbranch, we bring in new members." Navy Federal's membership growthaveraged 6.46% from 2003 through 2005. Another focus for NavyFederal has been mortgage lending. "We considered 2006 to be ouryear of mortgages so we took an examination of what we were doingacross the board in mortgages and really jumped into it." Dawsonpointed to a new mortgage product with no money down, no privatemortgage insurance for loans up to $850,000 in California becauseof the housing prices there.

He also said that the credit union had set a goal to be able toclose mortgages within 14 days of application. "We're not thereyet, but we're working on it."

"What I continue to learn at Navy Federal is that credit unionsare strong because they've earned the trust of their members,"Dawson observed. "Here at Navy Federal that is the most importantthing that we do is to continue to maintain that trust." Youaccomplish that by offering products and services good for themwith plain talk and no gimmicks or fine print, he said.

He added that generally, Navy Federal is not experiencing toomuch of a challenge with a number of troops deployed right nowbecause they have always served the military. One particular issue,the credit union is working on right now is getting an ATM set upin Djibouti; the Navy has requested it, but the credit union isstill working with the local government there to make it areality.

Another service Navy Federal offers members and potentialmembers is financial education, including major recruit trainingspots at Naval Station Great Lakes and Marine Corps Recruit DepotParris Island, where it is the on-base credit union. A few monthsinto his "tour" as the head of Navy Federal, Dawson sat in on asession at Great Lakes. He stated "not one of them was asleep" andone attendee turned and told him, without knowing who he was, howhelpful the course was. "I really appreciated that," he saidgrinning. "I about fell out of my chair. No president of a creditunion could ask for a better compliment than that."

Dawson described Navy Federal's philosophy on success as threesides of a triangle: if the credit union provides better employeetraining and, therefore, better member service and products, themember is more likely to use more products, which benefits thecredit union, and the employee then is benefited from the successof the credit union.

And the benefits Navy Federal headquarters employees can takeadvantage of are vast--from a 24-hour fitness center totransferring military spouses' jobs with their spouse to crosstraining to massage days to smoking cessation [email protected]