Last month a CU Times article featured the rebrand of CU Mortgage Services to The Servion Group. Their story is the kind we cherish and love to celebrate. Beginning with 3 credit unions working together to help their members. That’s cooperation among cooperatives at its best. Here’s the rest of the story. Enjoy!
PART ONE: Life Story and Experiences
What’s your current position and can you give me a brief overview of what it is you do in your work?
I’m the President and CEO of The Servion Group. Honestly, though, I always tell my employees that I’d drop all titles if I could. I’m a basketball coach outside of the office; I look at myself as a coach when I am at the office.
We focus on relationships rather than on transactions at Servion. In line with that, we’ve developed a language that supports our culture. We talk about “hitting the bullseye,” which is our way of visualizing of the different ways we want to add value for our partners.
We also talk about service in layers of the bullseye. Availability, accuracy, and partnership are the outer rings. You need to be able to hit them if you want to hit the bullseye. We hit our bullseye when we have earned our partners’ trust through availability and accuracy, and thereby become their advisor on the road to success.
As the coach of the Servion team, my day to day is about leading us to hit the bullseye for every credit union we serve.
What would you say most motivates you to do what you do? What are you most excited or passionate about?
I’m fortunate, when you asked me what I do day to day, you might as well have asked what I am passionate about. When I get done leading our staff townhalls or with an ideation meeting, I could run laps around the building.
One thing in particular that energizes me is innovation. The Servion Group came from an idea first drawn-up on the back of a napkin. That origin story is very much in line with my leadership style. If someone on our staff has an idea for a great solution – one that can profitably deliver the benefits of scale to our partners – I get excited about empowering them to go make it a reality. In fact, many of our services today came from staff pitching ways we could solve a pain point for our partners. Recent examples are our correspondent and wholesale mortgage channels, or our mortgage quality control service.
A current initiative that excites me is our “Shark Tank Innovation Challenge.” If you’re familiar with the popular show on ABC, Shark Tank, you get the idea. We want to empower employees to share great ideas. If the concept passes muster with our Shark Tank Advisory Board, which is staffed by our CFO and other leaders, we’ll provide the resources to make it a reality.
We are serious about our desire to continuously innovate. It’s one of the things that makes me excited to wake up and to come to work at Servion.
I want to hear the story of how you came to work with credit unions. What attracted you to work for The Servion Group?
When people ask about my career story I like to start with a great piece of advice from my father, who has been one of my greatest mentors. “Find something you love to do,” he always said, “and everything else will follow suit. If you do, the passion will come, the financials will come, and you’ll never work a day in your life.”
I found my Dad’s advice to be true in firsthand experience. In fact, I share a story with each new employee that covers this piece of advice. After college at the University of Iowa, I moved to the Twin Cities where I took job selling trolls. You read that right. I was a regional salesman peddling toy troll dolls; and I hated it. That dislike for my occupation was a sign post that prompted me to move on. When I finally did, I found my first job in mortgage lending at a local financial institution here in the Twin Cities; I loved it.
The change of course led to my joining what was then called CU Mortgage Services – now The Servion Group as of this year – over 22 years ago. Ever since I’ve had a career in a CUSO serving our credit union owners and partners. Dad was right, once I found something I loved to do, everything else did follow suit.
Finally, can you share something interesting about you that would surprise our readers?
You hear the expression “hire for attitude, train for skills.” I like to hire based on a set of characteristics, especially when their skills overlap with what the company needs.
One avenue I’ve found for doing just that is the basketball court at the local YMCA. I’m slowing down now, but I used to play there every week. It turned out to be an excellent avenue for meeting great employees who now work here in IT, as realtors, or as financial advisors.
PART TWO: The Business Story
Tell me the story of how your CUSO/Company was created – the early days. Tell me about some of the memorable characters in the history, some that brought your story color, drama, comedy, conflict?
The story of our CUSO is really a reflection of the progress of the credit union industry. As I mentioned before, we exist today because of an idea drawn up on a napkin 30 years ago. Our founders were three credit union CEOs who wanted to provide a mortgage product to their members. They realized that the best way to do so was to combine forces.
I also mentioned before that we look to solve pain points by serving as a cooperative governed by credit unions and for the benefit of credit unions. All the services we’ve launched since our founding have followed this same vein. The first service we provided was a “retail” mortgage partnership where we compensated our owners for handling certain steps in the lending process.
As the industry changed, our leadership team saw that the competitive landscape was also changing for us and for our partners. Credit unions needed a partnership option that increased the profitability of first mortgage originations. Our response was “correspondent” channel, launched in 2011. Correspondent partners increase profitability by managing more of the mortgage process.
Today, we have developed four customizable partnership options covering an expansive set of mortgage products. We’ve followed similar cooperative-style models for title, realty, and financial advisor services.
Our services have also followed credit unions as they’ve entered other loan products like commercial lending. In 2004, we launched what is now our Commercial Loan Resources (CLR) business unit. Sometimes people think that we actually do commercial lending. In fact, this business unit’s sole purpose is to help credit unions be commercial lenders. We help them manage the significant risks that come with commercial lending. If, for example, a credit union uses CLR together with our Commercial Title group, then they have a complete risk management solution for commercial real estate loans.
On September 19, 2017, we celebrated our 30-year anniversary and announced that we would be changing our name from CU Companies to The Servion Group. The new name, which became effective on January 1, 2018, reflects our growth. We now have 59 credit union owners and have 476 relationships – through our various services – with financial institutions across the country.
What have been the greatest successes in your opinion?
Our mortgage correspondent channel is on the top of the list. It was a significant development for our credit union partners. Correspondent partners handle more of the mortgage process –from taking application to closing – than does a retail partner. Their increased role allows correspondents to generate 5 times more in revenue (generally speaking) than they can in a retail mortgage partnership (for the same volume).
When you look at consolidation in the credit union industry, correspondent is designed to serve credit unions where they are at. To handle increased pressures from the cost of technology and regulation, credit unions are looking to grow their revenue from each product; but they also want to expand their offering. Through the channels we have today, we can structure a partnership that allows credit unions to offer every major mortgage product – conventional, FHA, VA, USDA, and Jumbo loans – to their members.
For Servion, correspondent lending launched us to a nationwide presence. It offered us a great opportunity to grow beyond our largely Midwestern footprint while also staying in our core competency.
Our new name is very much a representation of that nationwide trajectory. We are now a national financial services company that exists to promote the success of our owners and partners. As The Servion Group, we look the part!
PART THREE: Reflections and Lessons
If you could start your CUSO/Company all over again, would you do anything differently? Why and what would you do?
Sometimes great ideas scribbled on the back of a napkin take time to become reality. We work in financial services where success requires a very deep understanding of our businesses. For some of our ideas, getting the service off the ground has been more of a marathon than a sprint.
One example of a business that has had a learning curve is Commercial Loan Resources. Since it launched in 2004, that business has certainly seen its ups and down. At first, we were production oriented. Queue the recession and all those loans turned from bad to worse.
We realized we needed to bring on the right staff to lead the organization in a change of philosophy from production-oriented to a focus on risk management. In 2010, we hired commercial lending expert, Tony Lillie, who is now Chief Credit Officer of CLR. Since Tony came on board, CLR has underwritten $750 million in commercial loans. We have had less than $10,000 in losses during the same period.
Finally, when you think of the future for credit unions, what gives you hope and what makes you concerned?
Last year, I took note of comments made by Rick Nichols, President/CEO of River Region Credit Union, Jefferson City, Mo., who testified before the House Financial Services Committee on July 12. Nichols correlated industry consolidation with a decline in mortgage lending.
Since the outset of the financial crisis, credit unions have been subject to more than 8,000 pages of new regulations. “This never-ending stream of new regulations,” Nichols said, has caused credit unions to eliminate certain products and services. More than four in 10 credit unions offered mortgages during the past five years. Of those, some 33 percent have eliminated certain mortgage products or services. About 11 percent have stopped offering them all together.
“Regulatory burden has accelerated consolidation,” Nichols said. “Higher attrition rates are a direct result of both the dramatically higher regulatory costs incurred by small credit unions and the increases in those costs since 2010.”
Regulatory burden has increased consolidation by driving up overhead and by driving credit unions out of businesses like mortgage. We believe consolidation can be slowed when credit unions have access to partners that help them profitably offer mortgages, commercial loans, or investment and insurance products. That’s not pride talking; we know we are not THE answer to consolidation. We do know, though, what we do every day: We help credit unions build their businesses.