VIENNA, Va. – It's a milestone that's poised to happen sometime in November but when Navy Federal Credit Union reaches the $20 billion mark, the fanfare will be minimal and the emphasis will continue to be on being the primary financial institution for sailors and members of the Marine Corps worldwide. With a mostly mobile membership base around the globe, Navy FCU President/CEO Brian McDonnell sees the highlight as more of an internal celebration, preferring instead to give credence to the “if good services are provided, then growth will follow” philosophy. “Our core is primary lifetime financial services,” McDonnell said. “We take young Marines and sailors when they're 18, set them up for membership and hopefully, serve them throughout their lifetimes.” Chartered in 1933 by three civilian Department of Navy employees who pooled together $70 to provide emergency loans to each other, by the end of that year, the credit union had 49 members and $450 in assets. Nearly 60 years later, the credit union has grown to 2.4 million members, 4,000 employees, $19.9 million in assets and 98 branches worldwide, making it the largest in the nation. McDonnell is in a keen position to map Navy Federal's growth, having been at the credit union since 1970. His posts there include a 10-year stint as executive vice president involved in consumer lending, credit cards and branch office operations, then directing the credit union's mortgage department and in 1994 serving as senior executive vice president, under then-president Tom Hughes. Prior to joining Navy Federal, McDonnell spent four years as a supply officer on active duty in the U.S. Navy. He remained in the U.S. Naval Reserves, retiring as a captain in 1991. “We're looking to keep our loan rates down, minimize fees and that's different than a stock-owned entity,” McDonnell said. In turn, “we see low delinquency and loss rates with our members.” Indeed, Navy Federal recently sent out a special mailer for loan and savings discounts to the 180,000 members who've been with the credit union for more than 25 years. Navy Federal adds 12,000 new members each month and 100,000 new members are expected by year's end. Most recently, Navy Federal hosted an auto tent sale, which are gaining in popularity with many credit unions nationwide. In Virginia Beach, over the Oct. 4 weekend, the credit union approved 404 auto loans and leases worth $7.4 million. A second tent sale the following weekend in Fairfax with 14 other credit unions resulted in 157 loans and leases worth $3.9 million. It's these type of specialty offers that McDonnell said not only sets Navy Federal apart from the competition but also adds another building block to the credit union's mission of being all things to all members. Finding the Channels to Growth The credit union's success also comes by way of four delivery channels – online banking, branches, call centers and debit/credit cards. Seventy percent of Navy Federal's mortgage loans are processed online and 800,000 members are signed on to use the credit union's online banking product. Indeed, Navy Federal's mortgage lending ranks among the credit union's most profitable operations with $5.5 billion in originations this year alone. With 98 branches spanning the globe and three scheduled to open by year's end, when and where to open the next service center depends on where the need is, McDonnell said. Navy Federal has a five-year facility plan that looks at a range of members in one area – typically between 5,000 and 10,000 within a 25-mile radius – in determining where the next branch will open. But there are some slight exceptions to this rule. In Okinawa, Japan, for instance, 40,000 Marines have access to six branches there, but McDonnell said they lose $2 million on those centers each year. Quite frankly, “they're all young Marines and they don't take advantage of the services.” “If we were a bank, we would have closed the branches down,” McDonnell said. “But we see things differently than a bank. We're looking at the long term. There's 40,000 Marines there we're hoping to establish a long-term financial relationship with.” Stateside, the highest concentration of members are in Washington D.C. with 15 branches serving 250,000 members, followed by the Norfolk/Virginia Beach area with nine branches and 180,000 members; 160,000 members and six branches in San Diego and 100,000 members and four branches in Jacksonville, Fla. Another delivery channel that has surpassed Navy Federal's expectations is its debit and credit card program with 900,000 users. Younger members, particularly those between the ages of 18 and 30, are embracing the convenience of the Visa debit card. While McDonnell preferred not to disclose revenue figures, he did say that its card program is the largest offline signature Visa debit card issuer in the credit union industry. The credit union is also in the early stages of developing a smart card that looks to align with the U.S. Navy and the Department of Treasury. Navy Federal took a chance in 1968 when it launched the first 24-hour, seven-day, 365 days per year industry call center, McDonnell recalled. Back then, banks mocked the credit union because it took the risky chance of taking an application over the phone and disbursing a check with a promissory note for signature to send back. Today, Navy Federal has six call centers, which includes separate facilities to field consumer loans, checking and savings, mortgage and equity, credit card, certificate of deposit and IRA queries. Navy Federal received more than 16 million calls to its call centers in 2002 not including the automated service lines. A 55,000-square foot facility that will employ nearly 500 people by 2008 is scheduled to open by December in Pensacola, Fla. Even with its tremendous expansion, Navy Federal's growth has been more of a steady upward stream rather than a series of spikes, McDonnell said. By far, the credit union's entry into technology has allowed it to increase assets by an average of $2 billion each year. Indeed, assets went from $7 billion in 1992 to nearly three times that in amount in 2003 thanks in large put to its online offerings. While 40 credit union mergers have contributed to Navy Federal's growth since 1970, McDonnell said the success lies in what happens to those potential membership pools once the deal is done. “Our penetration rate is 80%,” he said. “It's more important for us to be able to penetrate our field of membership.” The recent rerouting of Navy Federal's charter manual eliminated many overlaps, paring down a nearly eight page-list of select employee groups to an easier-to-grasp member base of the entire Department of the Navy worldwide and affiliated contractors. “There has been some talk about using trade, industry or professional group (TIP) but the board and I think getting to know our members is more important,” McDonnell pointed out. TIP allows for a single occupational common bond based on employment in a trade, industry or profession and is limited geographically to a credit union's current or planned service area. Depending on savings inflows and loan originations, when that $20 million milestone is achieved sometime in November, McDonnell said there might be some cake and a celebratory banner. More importantly, “expense ratios aside,” convenience remains paramount for the 15% of military personnel and 85% civilians that make up Navy Federal's membership. “A former chairman and good friend of mine said `we should not pursue growth for growth sakes. If you provide good services, the growth will follow.' ” [email protected]