An interview with Cutler Dawson, president and CEO of the world's largest credit union

sMay 7, 2014 

Engaged in a conversation with a JBLM soldier about to be deployed to Korea, Cutler Dawson stood behind the teller’s window at the Navy Federal Credit Union Lakewood branch one afternoon earlier this week.

Which would be unusual for just any retired three-star admiral and former Persian Gulf aircraft carrier battle group commander, except that Dawson had a good reason to be there.

He’s the president and CEO at Navy Federal Credit Union, which is the nation’s largest credit union with 4.5 million members, 12,000 employees and $59 billion in assets. Navy Federal was founded in 1933.

A Naval Academy graduate, Dawson, 66, lives with his wife in Virginia. Dawson was in the Northwest to attend a gathering of credit union executives, and he took time to speak with customers, employees and The News Tribune.

Question: How does a former surface warfare officer and battle group commander find his way to a job as CEO of credit union?

Answer: Credit unions are governed by volunteer boards. I became a volunteer in 1993, and a board member in 1996. When I retired, and when the former CEO retired, I became CEO.

Q: Having retired once, what drives you in a second career?

A: I love the mission of Navy Federal. I have great respect for employees. It was a team I wanted to be a part of. I knew what they had done for me as a lieutenant, and when I got on the board I liked it even better. It’s not that banks don’t care, but credit unions really care. We try to do what’s best for the member, and the business will follow.

Q: Credit union membership seems to be growing. Why do you think that is?

A: The value proposition has always been there. The recent recession woke people up a little bit. We had a hard re-set, and people started looking for value. We’ve seen new members, and long-time members doing more things with us.

Q: This week you attended the National Credit Union Roundtable in Seattle. What did you find?

A: All of us are seeing that it’s a great time to be a credit union. People are more aware than ever. We talked about big data, and how we can take advantage of the information we already have. Also, the future of payment systems – will people in the future still be using credit cards and debit cards? And to what extent is mobile going to affect our business? We also talked about added regulation.

Q: While banks and credit unions consolidate with mergers and acquisitions, most of your growth has been organic.

A: Four years ago we did a merger in San Diego. We made an offer to hire every employee, and we hired them and paid them a bonus. We wanted to say to them: ‘Welcome aboard.’ I can say that in 81 years, we’ve never had a layoff.

Q: How did you do during the recession?

A: Pre-recession, Navy Federal always did lending for the right reason. We never did sub-prime loans. We came through the recession well.

Q: Some credit unions are trying to expand their commercial lending. Will you?

A: We do some business lending to members, but our bread and butter is car loans, mortgages and credit cards. That’s what we do. That’s what we enjoy doing. In 2013 we wrote 300,000 auto loans and 50,000 mortgages.

Q: What about delinquent loans?

A: We’re one-half to one-third less than the national average. Delinquencies on credit cards are less than one percent.

Q: You’re planning growth in the Pacific Northwest, and I see that you’ve got a major presence in San Diego. It looks like you’ll be in strong competition with Ray Davis at Umpqua Bank in both areas.

A: He’s a great guy. He’s got a great bank. But I’ve never heard of any of our members leaving us to go to Umpqua.

Q: You have branches across the country, and in Asia, Europe and Africa. You’re the largest credit union, period. But a local credit union, BECU, has been growing and is the largest non-government-affiliated credit union. Any thoughts on that competition?

A: I’m very proud of BECU and what they’re doing. It makes us all look good.

Q: Three years ago there was a kerfuffle when the government threatened to shut down, and the fear was that service members wouldn’t be paid. How did you react?

A: (The proposal was that) the military would only get half a paycheck. We put $600 million at risk when we said we’d cover the whole check. Our membership was quite appreciative.

Q: How did that decision come about? Long meetings with executives and the board?

A: We saw it coming to a head. I discussed it with our CFO and she said yes. I said we’re going to do it. It took 45 minutes. The board said yes.  The next Monday I heard from a 3rd class petty officer who said, ‘I want you to know I was desperate.’ I told her to stop crying.

There’s a quote from John Paul Jones: ‘He who does not risk, cannot win.’ You try to do the right thing. If it works out, fine.

Q: Let’s talk about growth. What are your plans in the Puget Sound area?

A: We have a lot of potential here. We have eight branches in the Puget Sound, and we’re looking to add three or four more. We’re looking for locations in Tacoma, East Bremerton and Lynwood.

Q: As the military downsizes, are you worried about losing members?

A: We have 5 million members, and only 12 percent are active duty. Family members perpetuate our presence. (We serve) active duty, retired, DoD (Department of Defense) workers and families. People should see if there’s a tie for them. We find that a lot of people don’t know they’re eligible.

Q: Do you work with a business philosophy?

A: It’s a triangle, with members, then products and services, and the base is employees. You have to take care of all three.

Q: You’ve had command of four ships, beginning with an ocean-going tug, and you’ve led a carrier battle group and the Second Fleet. How much of that experience do you bring to financial services?

A: I draw on that experience every day. If you take care of people, they take care of you. 

Q: Do you every think about your second retirement?

A: I love what I’m doing. I intend to stay as long as I can contribute.

Q: Do you miss the sea?

A: I miss the people.


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