For Jordan, Running a Billionaire CU Comes Down to making the Right Business Decisions

SACRAMENTO, Calif. – At Schools Financial Credit Union, President/CEO Jim Jordan doesn’t hesitate to use the “B” word. No, not bank. Business. “It’s a business,” Jordan declares. Yes, most successful credit unions – including SFCU – can brag about their service. But Jordan figures it takes more than that to prosper. “We’ve always approached every decision as a business decision,” he says. “We run this credit union just like a business, not based on emotion or what somebody might feel would be a good thing. We do a thorough business analysis and build business cases.” He backs that well-ordered focus with a B.S. from University of Southern California and an M.B.A. from Loyola Marymont in Los Angeles. After serving in the Army during the Vietnam era, his first civilian job out of college was in computers and communications at Transamerica headquarters in San Francisco. He then joined Telephone Employees Credit Union, now Wescom, in Pasadena as a staff analyst. While at Telephone Employees he worked for Robert Brain, the CEO, a man he considers an “exceptional mentor.” Brain had an M.B.A. from Stanford University, and impressed Jordan with his strong business know-how. “He was the brightest man I’ve ever met, was such a gentleman, and did a great job of delegating. I was extremely fortunate to work for him,” Jordan states. After three years Jordan moved on to became CEO of Orange County Employees Credit Union. Two years later he returned to Telephone Employees as executive vice president. Finally, in 1991, he was hired as CEO of SFCU. With two young children, one 7 and one 10, plus a 20-year-old-daughter and a 22-year-old son, Jordan doesn’t have a lot of free time off the job. But as a licensed pilot who owns an Aviat Husky, which looks like a Piper Cub, he’s often able to combine his passion for flying with business. For example, he serves on the WesCorp board and earlier this year flew down to a meeting in San Diego. Then he went on to Las Vegas for another business meeting, landing back in Sacramento in time for his daughter’s birthday. Jordan seems to welcome the intense concentration flying demands. “It allows you to be totally away from what you are doing at work. I also think the discipline required to be a good pilot is valuable for succeeding at other jobs,” he suggests. As a manager, Jordan likes to hire the most capable people available and let them handle their specific areas of responsibility. He admits it takes a fair amount of time to find top candidates. “We do have the benefit of being in a very pleasant area to live,” he notes. “We’re a couple hours from San Francisco, a couple hours from Olympic Village where they had the Olympics a few years ago, and we have an ideal family environment. I think it helps us attract some really talented people. There are no reasonable housing prices in California, but I believe prices here are maybe 50 percent or 60 percent of what they are in the larger cities. That’s another benefit.” Last year SFCU made a business decision to convert its host processing system. “We wanted to become a low-cost leader,” Jordan says. “We felt our prior system was a barrier to that. So on April 1, 2003, we converted to Symitar. We also went with WesCorp for some enhancements to make it even more highly automated. “Our employees and members were fighting long lines. We also got as high as 330 employees. Through attrition, we’re back now to 293. Beyond a tremendous effort by our staff, I would credit a great deal of our success to automation and the efficiencies we’ve gained. Some processes went from 22 minutes to 40 seconds.” Jordan believes members are also pragmatic about financial decisions, so he credits aggressive pricing with boosting SFCU into the Billionaires Club ranks. “When we look at our own successes when we stood out among our peers, it’s always been the result of having either more aggressive loan pricing or more aggressive savings pricing,” he says. “One example is when Bank of America went to free billpaying service, we immediately also went to free billpaying service. We offer free checking, which really is free checking. In the late 90s we offered very good savings rates, and savings grew very rapidly. We give our members excellent value for their dollar.” So there’s nothing to worry about? Not quite. “On the national front there are the bankers attacks. It’s unbelievable they don’t spend more time on their own business rather than our business. It’s a distraction that forces us to put more time and effort into lobbying and other political activities,” Jordan says. “Bankers have also been very aggressive here. We just had a bill that would have allowed us to serve the underserved in California if they were in our field of membership but had not opened an account. It seemed like a fairly harmless bill since the banks clearly don’t want to serve the underserved. Yet Bank of America and everybody else brought their lobbyists in and helped that bill not make it out of committee.” Credit unions may have a secret weapon. While banks seem to locate a branch on every corner, and credit union members who open a checking account still want a branch near their home, SFCU and others are getting into shared branching. It’s an idea Jordan agrees competitors such as Bank of America and Wells Fargo aren’t likely to adopt. The word “Schools” still remains in the SFCU name, although the credit union has a community charter. Educators still form the heart of the credit union, but does the name hobble efforts to reach out to a wider FOM? “We have done a couple in-house studies of that subject, and talked to folks in the Western part of the United States who have done name studies,” Jordan explains. “It’s one of those questions we don’t think we have a definitive answer to as far as whether it would hinder our growth. We do know our core source of membership is still the educational system, so it’s clear the name benefits us where we’re getting the bulk of our growth.” In fact, a community charter doesn’t necessarily automatically boost membership. Jordan notes all of the 26 Sacramento-area credit unions also have community charters. But the presence of so many credit unions, including California’s largest, The Golden 1, does seem to translate into a credit union savvy market. Jordan says you can’t pull together a focus group without everyone knowing what a credit union is and being able to name a number of the area’s credit unions. So SFCU’s marketing is primarily target marketing, stressing the value proposition rather than spending a lot of time explaining credit union basics. SFCU may rank in the Billionaires Club and cultivate a business-case orientation, but “I think we’re also small enough to be really focused on our membership and what they need and want. Our board of directors is very interested in how well we’re serving our members,” Jordan says. -