A 3-Year Mission To Explore 4 Visions

San Mateo Credit Union’s strategic plan is a primer for how to set goals and stay the course.

Top-Level Takeaways

  • San Mateo Credit Union’s executives and directors created a three-year strategic plan for 2015-2018 that defines target markets and outlines four areas of focus
  • Specific measurables for mortgage lending, payments, efficiency, and data use play a major role in the plan’s execution, and the credit union regularly assess progress and makes tactical changes as needed.

San Mateo Credit Union ($1.0B, San Mateo, CA) is boldly going where the Silicon Valley enterprise has never gone before.

The venerable cooperative is racking up strong metrics and positioning itself for more growth by following a three-year strategic plan crafted in 2015 and launched in 2016.


San Mateo Credit Union
Data as of 12.31.17

HQ: Redwood City, CA
MEMBERS: 88,720
12-MO LOAN GROWTH: 20.5%
ROA: 1.21%

The results so far include $151.3 million in mortgage funding with $46.1 million in purchase transactions in 2017 alone. That’s the most ever in one year for the 66-year-old institution. Along with propelling overall loan growth, the mortgage activityhas helped increase net interest income $3.3 million as total income for the credit union grew from $44.4 million in 2016 to $49.3 million last year.

Aggressive checking account rates and new payment strategies underpin interchange growth at SMCU. And the Golden State cooperative has doubed down on building efficiencies, leveraging member data, and deepening relationships with underserved neighborhoods that could benefit from a credit union’s touch in one of the pricier places to live in the country.

SMCU’s strong financial performance didn’t just happen, says president and CEO Wade Painter, who took the helm at SMCU in May 2015 after serving as executive vice president and chief financial officer at nearby Redwood Credit Union ($4.0B, Santa Rosa, CA). It’s the result of strong execution of highly relevant strategic visions.

Click to view MCU’s three-year strategic plan. Check out the final page, which lays out a vision for the years following.


A Robust Discussion

When SMCU’s board and senior staff created the credit union’s strategic plan, the group had a robust discussion about what the cooperative’s target market ought to be, Painter says. It’s a diverse assembly that includes existing and would-be homeowners, tech-savvy members and non-members, county and local government employees and families (the original SEG), young people in need of financial education, and the underbanked.

Working with John Myers of the C. Myers consultancy, a plan was built that revolves around four areas of organizational focus, each of which includes actions labeled Bold Steps and specific success measures.

Those four areas are the credit union’s vision for mortgage lending, payments, operational efficiency, and becoming a data-driven organization. The underlying pieces address the why and how, and the Bold Steps set the bar with specific targets for products, services, and operational improvements.

Wade Painter, CEO, San Mateo Credit Union

We’re not trying to boil the ocean, Painter says. We’re focused on a succinct vision of what we can accomplish over a three-year period.

Each focus area has a champion that reports during the credit union’s weekly senior leadership team meeting. To push along plan progress, SMCU also invests heavily in project management training to expand that capability through the organization, updates the board every quarter, and includes strategic goals in the performance evaluation of senior managers.

The Mortgage Lending Focus

Technology and relationships are both central to SMCU fulfilling its focus for mortgage lending.

The credit union has reconfigured software and refined other processes to enable it to compete in a market where houses routinely go under contract hours after they’re listed. SMCU’s record to close a loan is 10 days, according to Painter. And to fill its pipeline, the credit union is building relationships with local relate estate agents.

We’ve gotten tight with the realtors in San Mateo County, Painter says. We actually host their weekly meetings.

Since making it a priority, SMCU’s mortgage lending has grown nearly three times as fast as the 25 California credit unions with $1 billion to $2 billion in assets.

In addition to building relationships with real estate agents, SMCU embraces creative ways to help people of modest means afford homes, such as 40-year amortizations or an 80-10-10 loan where the second 10 is a second trust deed. It also offers a down payment assistance program in partnership with the county government.

Also Read: How Credit Unions From The Big Apple To Silicon Valley Help Members Buy Homes.

San Mateo Credit Union posted year-over-year mortgage growth of 31.56% in the fourth quarter of 2017, compared with 11.43% on average for the peer group Painter says SMCU generally measures itself against: the 25 credit unions in California with $1 billion to $2 billion in assets. This is the second consecutive year of such performance, and, so far, the credit union isn’t worried about not reaching it for a third year.

Our momentum on purchase transactions and realtor relationships will help counter potential headwinds caused by higher interest rates and contribute to continued growth in the future, Painter says.

The Payments Focus

SMCU has focused on building a payments ecosystem with a strong value proposition that includes debit cards, credit cards, digital wallets, rewards, gamification, P2P, merchant relationships, and linking payments usage to community support.

SMCU generates 40% more non-interest income per employee than its California asset-based peers in part because of its success in growing interchange income and because of its overall operational efficiency.

Interchange income is the largest piece of non-interest income at SMCU and grew from $5.5 million in 2016 to nearly $6 million in 2017. Painter attributes that largely to increasing the number of new and active checking accounts with offers such as 2% interest to frequent debit users and increasing mobile payments through Apple Pay, Android Pay, and Samsung Pay.

The Operational Efficiency Focus

SMCU’s efficiency ratio has dropped from 81.25% to 70.77% in two years.

There’s two pieces to that, Painter says. We’ve gained traction in moving routine transactions out of our branches and over to our technology channels and have changed behavior in the branch itself.

SMCU’s efficiency ratio has dropped by 19.1% in the past five years and is now lower than its peer average

The data in this article is pulled from Callahan’s Peer-to-Peer. Callahan Analytics can help your credit union benchmark performance. Learn how today.

The latter includes what he calls line-busting procedures that include branch staff armed with tablets engaging members in line and showing how easy it is to transact instead by app or ATM.

The strategy also includes continually evaluating all processes to identify activities it can eliminate and thoroughly examining vendor relations with an eye on getting what SMCU needs while paying what it should.

For example, the credit union saved $400,000 a year by switching benefits consultants. It was paying the previous consultant a set percentage of what the credit union paid healthcare providers. Now, the new consultant negotiates better deals that allow SMCU to charge its employees less while giving them more coverage, Painter says.

The Data-Driven Organization Focus

SMCU’s Data-Driven Organization strategy helps it execute the other areasa of focus, Painter says, and will help the credit union do even more after a looming core conversion is complete. In the meantime, the credit union is focused on using small data around member activity rather than big data from external sources.

According to Painter, many of SMCU’s peers spend a lot of money on data warehouses and business intelligence tools, then must figure out how to get value out of that spend.

We take a nearly opposite approach, the CEO says. We start with the data we want to give to our product managers, our channel managers, our payments managers, and our risk managers.

The credit union uses more than 70 dashboards to measure success and make decisions about channel, payments, product, member, and risk management.

The dashboards contribute mightily to the execution of our other strategies by fueling our business decisions and providing an effective means of gauging progress, Painter says.

Additionally, the credit union also now uses Net Promoter Score to quantify member satisfaction and identify areas for improvement.

We rolled out the EverFi online financial education system that’s now being used by thousands of members and other folks in our community, he says. This enhances our financial wellness and community focus.

Stationary Strategies, Changing Tactics

Painter says SMCU ended 2017 with five of its Bold Steps coming in on target and six slightly behind target. That performance is enhanced by the willingness to adjust on the fly when success measures are lagging.

For example, checking account holders weren’t opting in for fraud alerts at the desired rate. So, managers began encouraging staff to adopt the alerts themselves.

We wanted them to experience how easy it was to opt in and combat a perception that the process was too complicated, Painter says. Thus, they became more effective and credible at engaging members to opt in.

Meanwhile, the payments strategy champion sent weekly updates to the whole organization. The new tactics and visibility combined to help the credit union make a strong run at achieving its success measure, the CEO says.

Next up, the plan for 2018 to 2021. It’s a work in progress, Painter says, but it will include new goals for business lending, channel management, and organic growth.

We have the focus areas ingrained into our DNA now, he says. We’re confident about this approach.


April 16, 2018

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