A Publication of WTVP

Mark Spenny takes over as CEFCU’s president and CEO May 1, a position that will allow him to continue to build on the successes CEFCU has achieved. “In surveys about financial institutions, consumers consistently rank credit unions better than other financial institutions on quality of service and loyalty. And when we participate in surveys with our peers, CEFCU tends to come out either at or near the top of them. Arguably, we’re the best of the best. We’re passionate about great member service, and the CEFCU team continues to work to be the best in the world at providing great member service,” he said.

CEFCU is the area’s largest locally owned financial institution. And, with assets nearing $3 billion, CEFCU ranks 19th among credit unions nationwide.

Along with an undergraduate degree in finance and a Masters degree in business administration, Spenny has more than 20 years of experience with financial institutions, the last 13 at CEFCU. Positions with CEFCU have included executive vice president and chief lending officer.

He’s served on a number of community boards, including the Economic Development Council and the Peoria Urban League. Spenny has served as chairman of the board of Common Place and the Credit Union National Association (CUNA) Lending Council. In addition, he’s been a City of Peoria Neighborhood Development Commissioner and a Peoria Area Association of Realtors® Affiliate Committee Chair.

Spenny and his wife, Renee, have two grown children and two grandchildren.

Tell us about your background, education, etc.

I grew up in Victoria, which is in Knox County, and my dad worked for Illinois Power. I graduated from what’s now ROWVA High School in Oneida. After graduating, I went on to get a Bachelors degree in finance from Western Illinois University. While working at CEFCU, I earned my Masters degree in business administration from Bradley University.

Frankly, I didn’t see myself in finance early on, and when I graduated from high school, I really wasn’t sure what I wanted to do.

Two things ultimately attracted me to finance. First, I like the opportunity to help other people. Secondly, it allows you to work with a wide variety of people on an assortment of projects in the financial services world and the lending business, which is where I’ve spent most of my career. It’s fortunate for me that I get to have the satisfaction of helping a diverse group of people achieve their personal, business, and financial goals.

How did you first get into the financial services business? What interested you about the field?

Between my junior and senior years in college, I needed a summer job. I had a professor at Western, Dr. George Potter, who referred me to a bank in Macomb that he knew might need a little help. Dr. Potter also told me if I worked there during the summer, he could manage to get it treated as an internship, and I would get some college credit for it. He introduced me to my first financial job, and I continued working there on a part-time basis through my senior year in college.

When I graduated, I took a position as a mortgage lender with a bank in Sterling. This came about because of the experience I’d gained with the internship. I left the Sterling bank to become vice president of Mortgage Lending at First of America Bank in Kankakee. With First of America, there was an opportunity for me to transfer to the Peoria area, and that gave me the chance to get closer to home.

Tell about coming to work at CEFCU. Why was it attractive to you?

A while after I moved to the Peoria area with First of America, they talked to me about moving to Kalamazoo, Mich.; I really didn’t want to move away from central Illinois, so I started looking for a new challenge with a new organization. I wasn’t looking for just any company. It had to be a locally owned and locally managed organization that wasn’t likely to be sold. Plus, I wanted it to be big enough to offer me some opportunities. When I looked around at the local landscape for financial institutions, I only found one that seemed to meet all those parameters: CEFCU. I sent one resume, and I got lucky.

At the time, CEFCU needed somebody with mortgage lending experience and skills, and that was really attractive to me. I had a coworker at the bank who had, at one time, worked for a credit union. When he heard I was going to work for CEFCU, he told me I wouldn’t have any problems because my business philosophy, the way I do business, would fit with a credit union’s way of doing business. I didn’t have a clue what he was talking about then, but I’ve certainly come to appreciate the business philosophy of credit unions since I’ve been at CEFCU. That business philosophy is, first and foremost, taking care of members. We work to provide a very good deal for members, rather than just seeking profit maximization for shareholders. Working at a credit union continues to be attractive for me because of that philosophy.

Discuss CEFCU’s history and how the company has evolved.

CEFCU was founded in 1937 to serve Caterpillar employees. During that period, the country was coming out of the Depression, and it was very difficult for most people to get affordable loans. The philosophy of “people helping people” through a not-for-profit cooperative structure allows credit unions to offer more affordable loans and pay higher savings rates.

In the beginning, members deposited $5, which represented one share and their ownership right, in a savings account. The maximum share balance was $150, and the maximum amount loaned was $150. CEFCU was then known as Caterpillar Employees Credit Union, and the first office was actually a table in the cafeteria of Caterpillar’s East Peoria plant. Business was done out of a cigar box.

All business for the credit union was conducted inside Caterpillar plants. However, when membership grew to include Cat employee families, it became difficult for them to transact business inside the plants, so in 1972, an office was opened in Pekin Mall.

The opening of the office outside a Cat plant was the beginning of diversification for CEFCU. Caterpillar wasn’t comfortable with offices outside the plants, but the CEFCU Board of Directors, all Cat employees, were. We worked out an agreement with Caterpillar, part of which was to change our name.

Today, CEFCU serves 227,000 members who live or work in the surrounding 14 counties. In addition to the Cat employees and families that have been such an important part of CEFCU, membership also is made up of employees of more than 500 companies,Select Employee Groups (SEGs), and Caterpillar dealers located throughout the United States.

We have 19 Member Center locations, along with a number of convenience services, including CEFCU On-Line, our Internet banking service; Loan @ Home, our web-based mortgage application; Money Center 24 ATMs; Fast Track Teller machines; Touch-Tone Teller phone service; and CEFCU Bill Pay. Today, we have assets of more than $2.8 billion.

With all of the bank mergers that have taken place and the sale of local banking companies to out-of-state holding companies, CEFCU has become the dominant local financial organization. That dominance is because we’ve made sure people can continue to do business with a local organization focused on quality service.

We’ve stepped up during the last two decades to greatly expand our delivery channels, online services, convenience services, range of products, mortgage loan options, and investment services. We also provide trust services, and we’ve seen strong growth in our business services area. All of that adds up to a much broader product range and a greatly expanded delivery system compared to what we had 20 years ago. But while expanding our services, we haven’t lost focus on why we do it—to bring great value and great service to CEFCU members. That’s one thing that hasn’t changed.

You assume the position of president/CEO of CEFCU in May. How will your responsibilities change then?

Actually, those responsibilities started changing right after year-end. My focus through the years primarily has been lending. While loans always will be a very important part of what the organization does, ultimately I’ll have responsibility for all of the organization’s operations—loans, deposits, payment systems, investment services, insurance, making sure we’re in compliance with all regulatory issues, and working with CEFCU’s board to assure strong corporate governance. In addition, I’ll make sure we stay focused on growth opportunities and innovations in all those areas. Another focus will be to ensure we’re doing the right things for all of our employees in terms of compensation, education, and opportunities for them to advance professionally.

Beyond that, I’m working with the members of our CEFCU team to learn more about what challenges and issues they face. We have a very strong team, so I’ll be helped greatly in every area. As far as teamwork goes, I’ve had the opportunity to work with current President/CEO Eldon Arnold, who’s been a great help to me. CEFCU board members provide great insight into what things they’d like to see me do, including what I should achieve in my own personal development.

How does a credit union differ from a bank?

There’s a difference in business philosophies between a credit union and a bank. With a credit union, there’s no inherent conflict between doing the right thing for customers and doing the right thing for shareholders because they’re one in the same.

In addition, credit unions are exempt from some taxes because they’re member-owned, democratically-operated, not-for-profit organizations generally managed by volunteer boards of directors and because they have the specified mission of meeting the credit and savings needs of consumers—especially people of modest means. Credit unions do pay state sales, local property, and payroll taxes; credit union employees also pay federal income tax and taxes for Medicare and Social Security.

Even knowing that, banks continue to claim the only difference is that credit unions don’t pay income taxes. Yet, to avoid paying federal income taxes, many banks have converted to S Corporation Status under the IRS. In fact, more dollars are held in Illinois S Corp banks than all Illinois credit unions combined. But S Corp banks aren’t like credit unions either. The truth is, it goes far beyond the taxation issue. First and foremost, banks are owned by stockholders, and when banks earn profits, those profits go to the stockholders. Credit unions are owned by members, and members receive credit union “earnings” in the form of lower fees, higher dividends, lower loan rates, and more services.

All of a credit union’s capital comes from the ability to generate adequate net income to build capital. We can’t go out and find additional capital or sell shares of stock, and we don’t provide stock options to managers here. The point is, we aren’t just a bank that’s exempt from income taxes. The bottom line is we are, and can be, totally focused on taking care of members. After all, our customers are members and owners.

CEFCU announced a $7 million dividend in December. How are you able to return that amount of money to your member/owners?

Our board members have set a level of capital that’s appropriate for us to have as an organization. Not only do our board members want us to have strong capital to ensure we have a safe and sound organization, but our regulators and our member/owners want that too. We have to make sure we have adequate capital to carry CEFCU through if we ever would face rough economic times. At the same time, our board has determined CEFCU shouldn’t hold excessive capital. When we have a very good year and build excess capital, we give it back to members. We let our members decide what they want to do with that money—either keep it here and invest it with us, spend it, or invest it somewhere else. It’s their money, so it’s available for them.

We were able to return a $7 million dividend this year because of a good local economy and good member participation in terms of savings and loans. We also believe this was due to good management by staff, who continue to be good shepherds of our members’ money. When all of that comes together, we believe in giving money back to those who’ve entrusted us with it. Although it’s the largest single dividend we’ve ever had, it isn’t the first time we’ve returned a dividend to our members. Since 2000, we’ve actually been able to give back a total of $15 million.

Are CEFCU’s members mostly individuals or businesses? Why?

We only serve individuals, and some of those individuals own businesses. Our focus always has been on the individual member/owner, and what we provide for businesses is that one-on-one service for the people who own them. In terms of both numbers and dollars, we’re still primarily a retail financial services company serving individual members. The fact is, we have many more years of serving and focusing on retail. But at the same time, while we’re still mostly retail, we’ve built a very strong presence in terms of business because of our capabilities. And we continue to hear from business clients that we understand their businesses better and work more closely with them than other financial institutions do.

CEFCU offers all kinds of financial services to meet our members’ needs. That’s the reason we’re focusing on business services too. We were seeing that need from members and believed we should step up our ability to meet that need in terms of our talent—and the resources devoted to it—so we can provide a full range of services to meet those needs.

What are some of the misconceptions about CEFCU and credit unions that you’d like to address?

The biggest misconception members have about us is not being aware of the full range of products we offer, especially in investment and business services. Through the years, we’ve heard, “I didn’t know you did/had that.” A little bit of that is shame on us, maybe, for not being as aggressive as we should’ve been in promoting all of our services and products. But it takes a long time to change people’s perceptions of what they think you are, what you actually are, and what you do.

I think our expanded services in investments, trust products, and business services are very strong product offerings. But it takes a while to build people’s awareness and show them we can do a really good job. When we get the opportunity to sit down and talk with people, they walk away very impressed with what we’re able to do, and many times, they choose us over other providers. In fact, we’ve seen many members switch from other firms with whom they’ve had long-time relationships.

The biggest misconception non-members have about credit unions is that they may not be eligible to join. At CEFCU, membership is open to anyone who lives within the 14-county area we serve or is an immediate family member of someone who lives in one of those counties. Plus, anyone who’s an employee or retiree of Caterpillar Inc., a Caterpillar subsidiary, or a Caterpillar dealership may join CEFCU. Also, those who work for or are a retiree of a CEFCU SEG may join.

How has the financial industry changed during your career? What’s on the horizon for the industry?

There’s been an explosion in the number of products financial institutions provide. Today, our offerings go far beyond just savings accounts and loans. We also have seen a large increase in what’s offered in the way of delivery channels. It used to be pretty much a lobby and face-to-face way of doing business. Now, we deal with members face-to-face, earphone-to-earphone, and keyboard-to-keyboard with the telephone and online services, plus the Money Center 24 ATM network and Fast Track Teller services we provide.

Deregulation also has eliminated barriers to entry, so other types of companies are getting into a variety of financial services. That has meant we face many new competitors for what were traditional services. And ongoing consolidations and buyouts continue to produce ever-larger mega-financial institutions.

The complexity of the financial services industry—not only for people working in the business, but for consumers too—means there are a lot more choices for everyone. However, expanded options mean expanded complexity, which sometimes makes it more confusing for people to try to figure out what’s really the best thing for them. That’s why it’s so important to have a local institution you can depend on, where you can sit down and talk with someone who can help you understand the wide variety of products. You have the opportunity to gain information through a lot of different sources, including the Internet, but when it comes down to making that final decision, I think it’s important you have somebody local, someone who will listen, someone you know and trust.

What are your plans for CEFCU’s future?

Really great businesses focus on the things they’re passionate about, the things they can be the best in the world at doing. As I look at that and try to apply the concept to CEFCU, I see us being passionate about providing great member experiences and great member convenience. And, based on what members tell us, we do accomplish that. However, if members tell us they didn’t have a great experience dealing with CEFCU, we go out of our way to try to make it right. If it happens to more than one person, there’s something in our process we need to change to make it more convenient, to make a service easier and more member friendly, and to make the overall CEFCU experience better. We’re really passionate about that idea.

We have to make sure we remain focused on what drives our economic engine, and what drives our economic engine are the dollars in savings, loans, and investments our members keep with us. We have to continue to make sure our staff is focused, so we can turn the great service and great loyalty we’ve earned into bigger relationships and greater shares of our members’ wallets. That’s not only important for our economics, but it’s important for our members’ economics because that allows us to provide them a better value.

It’s a win-win situation for CEFCU and our members when they do more business with us. Members are winning because they get a better deal, and we’re winning because it’s providing more resources for us to serve them even better. It also allows us to find new ways to provide better service and better value. Keeping that ball rolling, and accelerating wherever we can, is what I want to see us accomplish for the future.

Both you personally and CEFCU are active in the community. Is that a tradition you hope to keep alive at CEFCU?

Like CEFCU management before me, I have a number of personal/professional ideals. Those include integrity, enthusiasm, lifelong learning, balance, and giving back. And I see those virtues continuing to be embraced by CEFCU’s team.

Giving back to the community continues to be important to the organization, and I can’t imagine us changing in the future. It’s important to remember that giving back is more than just writing a check; it’s giving of your talent. I’ve had the opportunity to do that with a variety of local organizations. We plan to continue to be a strong participant in the community, non-profit organizations, and organizations that give something back to the community. We’ll continue to be careful about the dollars we give because it’s our members’ money. And supporting and creating a community that’s good for everybody is also good for our members.

What’s the best piece of advice you’ve received over the course of your career?

It’s hard to zero in on just one thing. At an early age, my parents impressed upon me the importance of hard work and education. It wasn’t always fun, but looking back, I appreciate what they taught me.

When I first started working for Eldon Arnold 13 years ago, he gave me this advice: be both patient and tenacious. Those two things are hard to do together. If things don’t happen for you immediately, it’s important to remember to stay committed to your goals and not give up.

Another piece of advice that’s stuck with me during the years is, when working with people who ask what they should do, remember the phrase, “What do you think?” Let people provide input. There are many ways to accomplish a goal, and the one that generally works best is the one people themselves want to pursue. It may not be exactly the way I might go about doing something, but what’s important is that the results are the same. In my experience, they’re the same many times—or even better. If people are allowed to pursue the path they want to pursue, as long as we agree on what results will be achieved, many times their own ideas are the best way to pursue the goal. In other words, don’t be a dictator.

Is there anything else you’d like to address?

I’m very excited and consider myself very lucky to have this opportunity to work with a great group of people. And I’m pleased to work with a strong organization—strong financially and strong in terms of our members’ satisfaction and how they view CEFCU. I’m looking forward to continuing the great tradition established by CEFCU’s board, Eldon Arnold, and John Siefken before him, to ensure CEFCU continues to be central Illinois’ best financial institution. IBI