Sacramento, Calif.-basedGolden 1 Credit Unionis one of the largest financial institutions in California with 1,500 employeesand a membership of more than 750,000. It is also the sixth largest creditunion in the nation. The credit union has branches across the state, althoughthey are predominantly in Northern California. "Regardless, all of ourmarkets across the state are performing better. That's really an indication ofthe strength of our brand, the effectiveness of all our delivery channels andthe value we provide consumers," said President and CEO Donna Bland.
Bland has held that positionsince 2010 after serving as Golden 1's senior vice president and chieffinancial officer. She has been with the credit union for about 22 years. Priorto joining Golden 1, Bland was a certified public accountant with KPMG in itsSan Francisco and Sacramento offices.
In an interview with S&PGlobal Market Intelligence at the CO-OP Financial Services Think 16 event thisweek in Coronado, Calif., Bland spoke about the credit union's plans forgrowth, how it will deal with crossing the $10 billion in assets mark and theoutlook for auto lending.
The following is an editedtranscript of that conversation.
S&P Global MarketIntelligence: One of the themes at Think is finding new ways to create growth.What growth initiatives have you undertaken recently at Golden 1, and how havethe results been?
Donna Bland: Economic conditions forCalifornia consumers continue to improve and that, coupled with ourmarketing and value proposition strategies, have led to stronggrowth. Golden 1 has expanded our reach across the state. We recentlyapplied for, and were awarded, community charters in four counties in thesouthern part of the state. That expansion in conjunction with all ourgeo-market optimization strategies has helped us expand throughoutCalifornia As a result, we have achieved levels of increased membershipand lending success unseen in our recent history as well asstrong growth in assets of the credit union.
Lastyear, in concert with our long-time partner, the Sacramento Kings, wesigned a historic naming rights announcement for the currently underconstruction Golden 1 Center. When it opens in October 2016, the facility willbe the most technologically advanced arena in the world and we fullyexpect additional engagement in our core market, including increased membershipand product adoption from those who have not yet joined Golden 1.We have already enjoyed increased awareness in our market due topromotion in advance of the opening. Higher brand awareness and highconsideration is a winning combination.
Speaking of growth, Golden 1now sits just below the $10B asset mark that would trigger increased regulatoryscrutiny. How are you preparing for that?
Actually,as of March 31, 2016, Golden 1 exceeded the $10 billion mark by a healthymargin. We anticipated this milestone and for the past three years have beenpreparing. Our preparation included expanding our team with experts andtraining existing staff to help with additionalregulatory requirements for institutions of our size.
There has been a lot of talkin the industry about CECL. What do you see as the biggest problem with theproposal in its current form?
Whileit will not be effective for us until 2022, the upcoming capital stressingtesting model development will provide us with a solid base to start with.We anticipate having to fund more in provision in thefollowing years. We do not believe it will be as significant for us as ourexisting methodology provides for more than one year in losses unlike otherorganizations. Our provision could increase by more than 10 basis points peryear.
You have branches inalmost all of the largest markets in the state, with the notable exceptionof here in San Diego. Would you consider entering that market or maybe otherswhere you don't currently have a presence?
Wecurrently have no plans to seek approval to add branches in SanDiego. We effectively enter new markets in California with our indirectauto and home loan programs. We can serve members and consumers throughonline and mobile banking from anywhere in California and continue to developthis channel along with our other automated and centralized channels forservice and delivery.
There has been muchspeculation about the future of branches. Do you see Golden 1's overallfootprint shrinking as digital offerings continue to handle more and moretransactions?
Thereis a large segment of the population that still values the availability ofinteractions with staff, most notably for complex financial transactions likehome loan financing, retirement planning or investments. Even as we expand ourdigital offerings, we still have many members that continue toutilize both digital solutions and branches to interactwith Golden 1. We are focused on serving these members but also recognizethere is a growing segment of consumers that is comfortable without a physicalbranch. We are expanding to meet these needs as well.
What lines of lending are youexcited about as we move into the second quarter? Is there one in particular thatyou think you can see strong growth for the rest of 2016?
Ourmembers and consumers in California are showingmore confidence in purchasing autos and homes — whether theirfirst home or upgrading to their second — along with general purchasedemand on unsecured credit. Our branding and service delivery strategies willhelp us grow in these areas.
In auto lending, who do yousee as your primary competitors, and how do you take business from them?
Ourprimary competitors are large banks and the captive financeprograms of major manufacturers. We leverage a strongprogram consisting of great service, fair pricing and a consistentlyquick and easy application process, to gain new and recurring auto loans.
In terms of M&A, arethere smaller credit unions in your markets that might be looking for a partnerthat you'd be interested in acquiring?
Golden1 has had a long history of successful mergers. We are committed to exceptionalservice, convenience and value. Golden 1 is always willing to consideropportunities to partner with other credit unions that make strategicsense.