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

He spoke candidly recently with Credit Union Times during an interview about issues ranging from trade association politics to conversions to membership growth. As a member of NAFCU's board, the head of the world's largest credit union said he absolutely sees the need for two separate national trade associations with one specifically catering to federal charters. However, Dawson pointed out, "We also belong to CUNA. We think both organizations do a good job of representing credit unions. And, we also think, they're most powerful when they work together. They're most powerful when they spend their energy working the issues affecting credit unions and not 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 or endorse any particular candidate." He said he has met with local congressmen as well as key lawmakers regarding credit union legislation. "I also think that NAFCU and CUNA both do a good job of representing our interests on the Hill," Dawson said.

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

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

He cautioned credit unions to approach courtesy pay programs--which Navy Federal does not offer--"carefully" and denounced payday lenders, an increasing source of debt for service members. "We like to think that we offer a number of alternatives, like that $300 loan, like a line of credit on our checking accounts but 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 unions must push on with member education, understanding, patience, and teaching the difference between needs and wants.

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

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

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

For Dawson, a retired vice admiral, since he is no longer in the Navy, this is the place to be. "I miss the people in the Navy," he said. "There is no greater excitement than leading a team at sea whether it be a battle group or fleet, but you can't do that forever 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 with sailors and Marines, just in a different way." Dawson went straight from the Navy, during which part of the time he served on the Navy Federal Board, to head up the credit union when Brian McDonnell retired at the end of 2004.

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

The credit union has really homed in on bolstering member service. Navy Federal added nearly 1,000 new positions during 2006, a 20% increase, and plans to add more than 1,000 employees next year. The Pensacola call center was home to 360 of those and another 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 calls are routed to the proper departments in an average of 71 seconds.

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

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

Additionally, Navy Federal plans to open 70 new branches over the next five years. "We've seen that every time we open a new branch, we bring in new members." Navy Federal's membership growth averaged 6.46% from 2003 through 2005. Another focus for Navy Federal has been mortgage lending. "We considered 2006 to be our year of mortgages so we took an examination of what we were doing across the board in mortgages and really jumped into it." Dawson pointed to a new mortgage product with no money down, no private mortgage insurance for loans up to $850,000 in California because of the housing prices there.

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

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

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

Another service Navy Federal offers members and potential members is financial education, including major recruit training spots at Naval Station Great Lakes and Marine Corps Recruit Depot Parris Island, where it is the on-base credit union. A few months into his "tour" as the head of Navy Federal, Dawson sat in on a session at Great Lakes. He stated "not one of them was asleep" and one attendee turned and told him, without knowing who he was, how helpful the course was. "I really appreciated that," he said grinning. "I about fell out of my chair. No president of a credit union could ask for a better compliment than that."

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

And the benefits Navy Federal headquarters employees can take advantage of are vast--from a 24-hour fitness center to transferring military spouses' jobs with their spouse to cross training to massage days to smoking cessation sessions. --scooke@cutimes.com

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Honored Leading World's Largest CU, Dawson Offers Navy as Resource for Other CUs, Hopes Trades Work Together

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