Anatomy Of A Dual Market: An Update On Security Service Federal Credit Union

The Texas-based juggernaut now serves three states and nearly a million members.

With $7.4 billion in assets and more than 900,000 members at midyear 2013, San Antonio-based Security Service Federal Credit Union is the eighth-largest credit union in the United States by assets and the fourth-largest by members. It is also the largest of Texas’ 529 credit unions, the most of any state, or republic, in the country.

In the fall of 2011, Callahan Associates spent three days on-site with Security Service, learning about the challenges and the benefits of working in two diverse states: Texas and Colorado. In December of that year, Security Service announced the purchase and acquisition of Salt Lake City-based Beehive Credit Union. In addition to adding a new state to its already expansive market footprint, SSFCU picked up nine branches, more than 18,000 new members, and approximately $145 million in assets.

Its February 2011 PA of Family First Federal Credit Union in Orem, UT, brought its five-year merger and acquisition count to seven. And since its inception in 1956, SSFU has undertaken more than 20 such growth opportunities. The credit union now serves a market area whose branches are as far flung as Salt Lake City in the north to Brownsville, TX, in the south and from New Braunfels, TX, in the east to St. George, UT, in the West.

According to Search Analyze data on, as of midyear 2013, Security Service had 70 branded locations. However, through its partnership with Co-Op Financial Services, SSFCU offers members access to 5,000 shared branching locations and more than 35,000 ATMs nationwide. Despite its size and accessibility, though, its operating expenses as a percentage of average assets is lower than that of its asset-based and state peers — 2.78% for SSFCU versus 2.90% for credit unions with more than a billion in assets, 3.83% for Texas credit unions, 3.53% for Colorado credit unions, and 3.47% for Utah credit unions. Additionally its member penetration is more than four times greater than that of its state peers. SSFCU, which operates under a SEG-based charter, serves 28.61% of its potential market. Texas credit unions on average serve 6.24% of their potential market, while Colorado and Utah credit unions respectively serve 8.19% and 8.04% of their potential markets.

Although SSFCU’s midyear average loan and share balances were lower than its state peers, it turned that around in its total member relationships. Security Service posted an average member relationship of $14,086 as of June 30 versus $6,226 for Texas credit unions, $6,640 for Colorado credit unions, and $5,763 for Utah credit unions.

How Do You Compare?

Check out SSFCU’s performance scorecard, then build your own peer group comparison.

This is the kind of outreach and relationship building one might expect from a credit union with SSFCU’s ambitions.

Our overall vision is to become America’s best credit union, says John Worthington, executive vice president andchief communications officer at Security Service.

Deposits, Lending, And Rates

Growth and performance are important, but through the years SSFCU has kept its eye on service, and it has built a solid strategy of leveraging one market’s strengths to buttress another’s weakness. For example, because of its mostly affluent, retired military base, the Colorado Springs market is generally more interested in CD rates than mortgages. Demographics drive the pricing of products as much as their popularity, and SSFCU employs regional pricing to ensure it can offer the most aggressive rates to individual markets while still supporting the institution’s overall portfolio mix.

Our periodic CD promotions are effective at bringing in deposits and providing the liquidly we need to continue to lend, Worthington says. In San Antonio, the credit union’s 15-month certificate of deposit maxes out at 1.25%, whereas in Colorado and Salt Lake City, the same CD offers a 1.00% max.

The credit union must pay close attention to its deposits because for 10 consecutive years, SSFCU has been the largest indirect auto lender in the United States. Its average auto loan in August was $26,000. That month, SSFCU posted its third-highest total lending month ever, with indirect lending contributing more than $283 million. Worthington credits the success of SSFCU’s indirect lending program to the time and energy it devotes to developing dealer relationships. When it entered the Utah market, for example, the reputation it had already built through dealership chatter helped it quickly establish a foothold in the market. In July, J.D. Power ranked SSFCU fifth among all prime retail credit lenders in the country in its 2013 U.S. Dealer Financing Satisfaction Study.

More generally speaking, SSFCU’s 12-month loan growth topped its state peers’ at midyear — 9.59% versus 7.43% for Texas, 6.71% for Colorado, and 6.57% for Utah credit unions. And its 106.2% loan-to-share ratio goes to show its pricing strategy is working. The loan-to-share ratio for Texas, Colorado, and Utah credit unions is 71.35%, 67.65%, and 72.79%, respectively. Even credit unions with $1 billion or more in assets posted a much lower 70.31% loan-to-share ratio at midyear. Although the tide is turning, SSFCU is one of the few credit unions that has been able to consistently rely on loan growth exceeding share growth throughout the recession.


One of the ways SSFCU ensures optimal member service is by offering top-notch self-service opportunities. In 2013, in-house designers and programmers at Security Service tackled its My Branch online banking. The redesigned site, which the credit union rolled out in September, offers a friendlier member experience that allows users to transfer money between institutions— a great way to get someone to move from their bank to SSFCU, says Worthington — and view same day deposits, including for the new remote deposit capture feature offered in the credit union’s mobile app.

Members have embraced the technological upgrades thus far. Almost 180,000 members re-enrolled in My Branch from Sept. 1 to Sept. 19 and 63,000 users enrolled for the mobile app, which supports iPhone and Android smartphones.

For members who prefer over-the-phone versus online communication, SSFCU launched a Spanish version of its voice response system in September 2012. This is a nod to knowing your member, as in El Paso, TX, 85% of members prefer to conduct business in Spanish. When SSFCU acquired West Texas Credit Union in 2009, it upgraded that institution’s existing call center. Now, members from all of SSFCU’s markets have 25 dedicated bilingual call center representatives who can help them in English or Spanish.

Core Values

In December 2012, SSFCU’s board of directors promoted Jim Laffoon to president. Laffoon, who was executive vice president and chief operating officer of SSFCU when Callahan visited three years ago, now runs the daily operations of the credit union. The credit union’s longtime CEO, Dave Reynolds, continues to represent Security Service in industry, trade, and community matters as he plans for his retirement.

The Core Values of Security Service FCU

Security Service posts its core values on its walls and in its work areas. Employees, in turn, have taken them to heart.

  • Caring: We listen with a sense of urgency.
  • Innovative: We find the best solutions.
  • Honest: We tell the truth.
  • Fair: We do the right thing.
  • Dedicated: We finish what we start.

Under Laffoon’s consultative leadership, the credit union has renewed its focus on employee investment. In March 2013, Laffoon and his executive team  went on a whirlwind tour of the credit union’s market areas in all three states to meet with all employees.

This was the first time some of our employees had seen the senior leaders from our corporate headquarters, Worthington says. It put faces to names, and they could see someone cares. It was well received.

During a dinner and presentation, executives got to know the employees and outlined the credit union’s strategic plan to help them understand what SSFCU is trying to accomplish. Employees had the chance to identify what they saw as foolish activities. Throughout the first half of 2013, COO Mike Chapman returned to all areas for follow-up meetings with managers and employees to further address and resolve the foolish practices lists.

In addition to the executive tour, SSFCU has expanded its employee wellness program, CU Fit, which is geared toward a work/life balance of physical, financial, and emotional well-being. The program includes free gym membership, personal financial management classes, and specialized care services such as an anonymous phone line that offers emotional help.

For three consecutive years, the San Antonio Express News has named Security Service a top workplace — the credit union ranked No. 95 nationally in 2013 — and the San Antonio Business Journal selected SSFCU as one of the healthiest places to work in the city in 2013.

Want To Learn More?

Read Anatomy Of A Dual Market in the third quarter 2010 issue of CUSP.

October 8, 2013

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