Bill Cheney believes the economy may be headed toward the “soft landing” the Federal Reserve has been aiming for in recent months, as interest rates begin to fall—a welcome relief for nearly 1.4 million members of SchoolsFirst Federal Credit Union.
Cheney, CEO of California’s largest credit union and the fifth largest in the nation, said the Fed’s recent rate cut, while not impacting mortgage rates yet, has led to lower rates on new car loans variable rate loan products such as credit cards.
“Our members are able to save a little bit more and prepare for the future,” the CEO told the Business Journal. “And then, hopefully, we’ll see a little more relief from the Fed in terms of interest rate reductions. I think we’ll see at least one more [rate cut] before the end of the year. And then, three or four next year. Nobody knows for sure.”
SchoolsFirst ranked No. 1 on the Business Journal’s annual list of credit unions headquartered in Orange County, reporting a 7.6% increase in asset growth to $30.9 billion for the year ended June 30, 2024.
Asset Growth Returns to Pre-Pandemic Levels
Cheney, named chief executive in 2014, said growth is returning to normalcy after four years of pandemic-driven volatility.
In 2020, the credit union experienced tremendous growth because people received stimulus money and weren’t spending as much, leading to a “large influx of deposits,” he told the Business Journal.
In 2022, spending picked up again, but it remained flat year-over year.
The 7.6% rise for the year ended June 30 is more typical of increases experienced before the pandemic, the CEO said.
“That’s more like what we used to see in a normal year — seven to 10% deposit growth.”
Despite a challenging economy in 2023, SchoolsFirst managed to add nearly 118,000 new members, bringing its total membership to about 1.4 million. Of those, 542,706 that are in Orange County, where membership increased by 3.4% year-over-year as of October.
“We had record membership growth,” Cheney said of total growth last year.
He attributes the asset growth and membership increase to staying true to the credit union’s niche business model — serving school employees and their family members.
“While we’ve expanded our footprint geographically, we’ve kept our focus on serving school employees and their family members,” he said. “We design products and services for them.”
For example, the credit union has a summer saver account specifically for school employees that offers a 6.5% rate during a period when they don’t receive a paycheck.
In 2023, SchoolsFirst also provided $396.3 million in direct savings to its members from higher dividend rates on savings, from lower interest rate loans, and fewer fees.
“We do have very competitive rates and fees,” Cheney said.
Such perks create organic growth as members encourage new school workers to join the credit union.
“Some of that growth just comes from word of mouth,” Cheney said.
New ATMs, Digital Enhancements Keep Members Happy
New technology and digital services have also contributed to membership growth.
In 2023, SchoolsFirst launched online appointment scheduling, deployed modern ATMs and improved the real estate loan tracking experience.
The new digital tracking feature allows members to follow the progress of their home loan online, from the appraisal stage to loan approval and funding.
“It’s one of the biggest financial decisions a member makes,” Cheney said of buying a home.
Despite people using less cash, Cheney said ATMs are still very popular throughout the credit union’s 70 branches.
“Our members still like to have the ATMs available. They’re very high in volume, especially the ones in our branches,” he said.
So, SchoolsFirst made it a “big project” over the past several months to modernize more than 350 ATMs at branches, stores and campus locations throughout the state. There are about six ATMs left to upgrade.
The new machines feature more currency options, so you’re not withdrawing only $20 bills.
If you withdraw $100, for example, members can choose to receive a single $100 bill, five $20 bills or 20 $5 bills. Receiving a mixture of bills is also possible.
“You can change the mix of currency you get,” Cheney said. “It’s very popular.”
Sticking to growth within California
In 2020, SchoolsFirst acquired Sacramento’s Schools Financial Credit Union, which grew its assets by $2 billion and helped it expand in Northern California.
While the credit union has a TIP (trade, industry or profession) charter, which technically allows for national expansion, Cheney said SchoolsFirst has no immediate plans to pursue expansion outside of the state.
“We are sticking to California,” he said.
SchoolsFirst opens about two to three new branches a year and remodels about one or two locations to keep them updated. Cheney said the selection of new locations are guided by member demographics, traffic patterns and convenience.
Full-service branches are often located in high-traffic areas, such as shopping centers with popular anchor stores like Target.
“We want it to be convenient for our members,” he said.
2023:
BY THE NUMBERS
$6.6 billion: Loans funded
$18.9 billion: Loans net
1,368: Members who bought a home
87,878: Cars purchased by members
4,623: HELOCs opened by members
124,849: Personal loans opened
