“Firing Up the Growth Engine” with Ben Lemoine, Suncoast Credit Union (FL)

This month, the guys are joined by Ben Lemoine, the Chief Financial Officer of Suncoast Credit Union located in Florida. Ben outlines his professional journey, which evolved from his days in Corporate CUs and consultative positions into the accountability of the CFO's chair at the 10th largest Credit Union in the country by asset size. He discusses Suncoast's hyperfocus on member acquisition and being able to see the direct impact they have on members' lives. Ben also shares the Credit Union's recent foray into using AI to enhance productivity. 

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Transcript

On the Balance Sheet® S5 E_4- “Firing Up the Growth Engine” with Ben Lemoine, Suncoast Credit Union (FL)

Transcript

[Vinny, 00:00:05]

Welcome to On the Balance Sheet, season 5, episode 4. Today, we are joined by the Chief Financial Officer of Suncoast Credit Union, Ben Lemoine. For those who are not familiar with Suncoast, you probably will be soon, I believe, by assets, they are now the 10th largest credit union in the United States. So we have some visibility into quite a large shop.

[Zach, 00:00:26]

This is probably the biggest one we've had on so far, Vin, right? 10th largest in assets, 7th largest in membership. And I believe you said they are the largest CDFI in the country as well. So, a much bigger kind of community institution. We're going to dive into how they manage that growth because they've grown a ton over the past decade, as well as some M&A stuff and some culture and other things that I think, as you grow, it's really important to understand how those things play themselves out. So Ben is, we're looking forward to talking to him and kind of getting his thoughts on Florida, you know, where they're based out of, as well as kind of how they've been able to grow so successfully over the years. And I'm looking forward to this interview.

[Vinny, 00:01:08]

Without further ado, Ben.

[Zach, 00:01:17]

Welcome to On the Balance Sheet. We are very excited to have Ben Lemoine, Chief Financial Officer at Suncoast Credit Union, the 10th largest credit union by asset size as of the end of last year. Ben, how are you doing today?

[Ben, 00:01:31]

I'm doing great, thank you.

[Zach, 00:01:33]

We're really, really pleased to have you with us. And what we'd like to do to start is just take a step back, and could you walk us through, for our listeners, kind of your career journey from breaking into the industry and how you kind of got to the C-suite of, again, the 10th largest credit union in the country?

[Ben, 00:01:52]

Sure, thank you. So, I initially started at corporate credit unions. I started right out of college, and the first thing I had to do when I got the job was learn what a credit union was. Starting at corporate credit unions, I worked with credit unions of all sizes, from a few 100 million in assets to over 10 billion in assets. And I specialized in asset liability management reporting at the time and even bond investment sales, which kind of gave me a comprehensive view of balance sheet dynamics across the industry. And so over time, I did transition into an advisory role at the corporate, helping credit unions develop balance sheet strategies around liquidity management, hedging, investments, loan sales, capital stress testing, and other strategic initiatives that the credit unions may have had. And while I really value this work, it was on my toes, working with different balance sheets, different needs, different people. I felt like I was always missing the accountability aspect that comes with executing the ideas that you're recommending. And ultimately, I just really wanted more ownership of my strategies, both for the successes and the failures, right? They weren't always the best recommendations. So that led me to join Mission Federal Credit Union, which is in San Diego. And I joined as the VP of Finance and Treasury there. So, moving from the advisory to direct execution. And then I joined Chartway Credit Union as the CFO four years after that. And then eventually joined Suncoast Credit Union, where I now serve as the CFO. And as you mentioned, we're the 10th largest credit union in the country, 7th from a total members standpoint, which is kind of what we look at a little bit more closely. And as of 3/31, so a couple of days ago, we just crossed the $20 billion mark. And we are now officially a tier 3 credit union with all the fun stuff that comes with, as well. But really the progression felt natural, from understanding the industry broadly at the corporate level. It gave me that high 40,000 view of the industry. And then advising institutions strategically to now leading a financial function and being directly accountable for the results of some of the decisions that I'm making. And at Suncoast, so now I oversee all of the financial functions, as well as IT, the project management office, data analytics, data sciences, M&A, and then I also sit on our newly formed CUSO holding company board to assist with a lot of the fintech investments that we're doing. So that's it in a nutshell.

[Vinny, 00:04:40]

That's all you have going on? That's it, Ben? No, this is Vinny here, and thanks again for joining us. One of the things I think would be interesting if you could sort of highlight to our listeners, we've got folks that are in the credit union space, bankers as well. Could you sort of talk about the differences in working at a credit union versus say like a Suncoast? Probably obvious, but just curious if you could just elaborate on that a bit.

[Ben, 00:05:06]

Yeah, essentially, so for those who aren't familiar with the credit union industry, corporate credit unions are bankers' banks for credit unions. And they are credit unions, and they absolutely embody the people helping people philosophy. And they're staffed by the same kind of caring individuals committed to the credit union mission. However, they are one step removed from the end member, which is ultimately the person's life who we're trying to improve. So, at natural credit unions like Suncoast, Mission Fed, or Chartway, we do have the ability to directly impact members' lives. Where we're in the communities, we can see the difference we make in real time, essentially. And at Suncoast in particular, we go where banks typically don't want to go. We operate branches in rural areas where the balance sheets might be super small for a branch, but transaction counts are through the roof, which tells us that we're helping people simply by being present and accessible in that market. It also gives us opportunity to tailor our products and genuinely assist members, not just to maximize profits. Rolled out solutions focus on helping people increase credit scores, providing financing to those who can't get it anywhere else. We approach those decisions primarily through the people lens and not necessarily the financial lens. And corporates also do that. And I think that they serve a niche market within the industry, which is very important. And even as a $20 billion institution, where we may have sometimes outgrown some of those services, we're still very big supporters of multiple corporates out there because of the important work that they do in helping the smaller credit unions, whether it's from a regulatory standpoint or just even a reconciliation standpoint, whatever support that they provide, ALM strategies and so forth, it's very important. So we continue to support the corporates, and they're a critical part of the industry.

[Zach, 00:07:20]

Terrific answer. I think it always helps to take a step back because some folks aren't as familiar with those. I think the Bankers Bank is a good comparison point too. But Ben, moving, I think, to Suncoast, which to us is really fascinating and really interesting, what you folks have been doing there. Based on what I've been, our research and what I've been looking at here, the growth you folks have had has been, I'll call it strong, but I think it's more than strong, really doubling since 2018. And you have a recent acquisition that you announced in Q1 as well. What have been the main challenges in kind of managing the growth that you folks have had from a risk perspective?

[Ben, 00:07:58]

The growth really has been tremendous; and we've doubled in assets in a short period of time. But as you mentioned, it does come with substantial challenges across multiple dimensions. And I would say first and foremost, regulatory complexity has increased significantly. And especially now that I just shared where it's tier 3 as of a few days ago, it carries additional regulatory requirements, including higher or minimal capital thresholds under stress testing, enhanced supervisory expectations from the NCUA. We had to build more sophisticated risk management frameworks and strengthen our compliance infrastructure and demonstrate our capital planning capabilities, and that we can withstand severe stress scenarios. Essentially, we become, I guess, what they call systemic risk for, and they look at that very closely. So regulatory, I would say, is probably number one. Operational infrastructure is probably very close behind. We've required significant investments in our digital platforms, enhanced data capabilities, building out analytics platforms, and investing heavily in cybersecurity and business continuity planning. So these are big-ticket items that actually, some of those go straight back to the regulatory requirements that the NCUA is watching very closely and want to make sure that we can support the growth and the financial responsibility of being such a large credit union. Talent organizational capacity is critical. I think we're seeing a shift in, and that's not just credit unions. I think as a whole with AI coming out and how that's, it's already changed everything that we do. And that's not just for credit unions. I think that's for everybody, in my opinion. And that requires a new skill set. It requires us to upskill our current staff or bring in people with that expertise. And we are competing for that talent, certainly with other financial institutions, but even across industries. I think that there's a need for that. And one that is very important to certainly to Suncoast, but to me as well, is the culture preservation as you grow to be such a large organization. That can be a great challenge, to maintain a strong culture and not see it dilute as you grow. And at Suncoast, we have a culture boost philosophy, and we use external partners for that. We have a culture equation, which we live and breathe by. And it's something that we continuously make an investment in, whether it's money, time, or resources. And we meet regularly to make sure that we're maintaining that culture, and we continue to evolve and grow in the direction that we want to, and that leads to some of the M&A activity that we're seeing; it's all tied to culture at the end of the day. So, a lot of different challenges that we're trying to tackle, and obviously you kind of have to take it one day at a time and keep evolving and growing.

[Vinny, 00:11:28]

Yeah, Ben, Vinny again, I just want to follow up on the sort of the focus on the culture. I was kind of curious, just maybe a specific example of, and I'm not asking for the algorithm, but how does the culture equation sort of work, if I heard that correctly? Interested in kind of what are the components and how do you really manage that? Because that's something we see across the board with our clients, whereby as they grow, it becomes really hard to keep that feel that they used to have.

[Ben, 00:11:54]

Yeah, and the culture equation really is something that we look at, and we essentially live by here. At the top of the equation, we have our mission, improving the financial lives of our members. And goal is to reach 2.5 million members by 2030. And that's kind of our North Star, so to speak. And you'll notice that our growth goals are always around our members. So we look at growth around the members that we reach, not the total assets of the institution. And I think that resonates across the organization in a lot of different ways because we have a member-centric approach to everything that we do, and total assets just naturally come with it. The more members you reach, the assets will follow.

[Vinny, 00:12:55]

Maybe back to one of the follow-up questions I wanted to have as well. It's like, you know, maybe you can elaborate more on the focus on the membership. You know, I was looking at some of your—who knows on AI what was accurate or not—but looking at some of the loan origination that you folks have done in the last year. And I noticed it's obviously quite sizable, but the average loan size, according to my analysis, I can't say analysis, research—was pretty small, like the average. So it's clearly member centric. I think it said the average residential mortgage size origination was about $150,000. Does that make sense? Is that accurate? And clearly, I'd like to hear more about the focus on just growing that membership.

[Ben, 00:13:42]

It does make sense. We do have smaller average dollar size. We are low-income designated credit union. We are a CDFI. We're actually the largest CDFI in the country. And we focus on the underserved. If you look at where our branches are located today, you'll see that, yes, we are in the heart of Tampa. We are in Orlando. Soon we'll be on the East Coast as well. But a lot of our branches are located in rural areas. And we're helping people that are underserved, that don't have access to financial tools, certain products. Some people don't even have bank accounts, right? And so, how do we teach those individuals? So there is the whole financial literacy component that we're helping with as well. But we're trying to reach the people who need it most. And we demonstrate that a lot of different ways. We have so many testimonials and stories, and of how we've changed people's lives across our membership. But also, how our staff is changing our people's lives and how they're focusing on that. But we make the hard decisions sometimes looking through the member's lens, understanding that we're going to lose money with some of these initiatives that we're making. And we're okay with that. And sometimes you look at, I think the current environment that we're in is the perfect example. We're seeing a lot of financial institutions pull back on credit, right? We're in tough times. People are having a hard time making ends meet. And so, the natural thing for, for our industry to do is tighten standards and making it harder to get a loan. At Suncoast, we've actually leaned into it. Not only did we not tighten, but we've also kind of loosened some areas, which we're feeling, right? Like from the credit risk standpoint, I think as an industry, we're seeing it, but we're seeing it here at Suncoast as well, probably above levels that we're typically comfortable with. But we're also helping the people that need it the most. And at the same time, we are creating very loyal members because when you're there during hard financial hardships and you're there to support your members, they don't forget that. They get on the other side of that, and they are not even looking at other financial institutions for any other products. And so, we have that member loyalty. We continue to create it in that manner. We're 82, which is industry leading and particularly for a large credit union, we pride ourselves in that, that we're able to provide that level of service despite our insides.

[Zach,00:16:32]

Ben, I think within all that, you mentioned that 2.5 million members by 2030. I know you have an acquisition pending here that might get you closer to 1.5. Is it to get to bridge that gap and keep the member kind of centric mission. Is it a combination of kind of the loyalty you mentioned and the word of mouth and spreading that way? Is it more acquisitions? Is it new markets? Kind of how are you guys thinking about growing that membership that much? Because that's a big number, right? To get to that $2.5 million, sorry, 2.5 million people spot.

[Ben, 00:17:09]

Yeah, it is a big number, and essentially that's our North Star. That's how we view it, and there is, we believe in the Suncoast value proposition so much that we feel like it's our responsibility to reach as many people as we can with it. And that $2.5 million people North Star comes directly from that. You're right that in the next four years, are we going to be able to grow by another 1 million members? Without M&A, that's hard. And up until this recent merger announcement, Suncoast has really not been that active in M&A activity. There's been a few in the past over the history of the credit union, but very small acquisitions here and there, but nothing like this one. And I think that's something that we're going to continue to look at. That being said, we're seeing activity, M&A activity, just ramp up in the industry. And oddly enough, despite being the elephant in the room, sometimes people are reaching out to us about potentially looking at a merger opportunity. And that's something that, over my career, has changed a little bit. It always used to be the acquiring or the larger institution reaching out to the smaller institutions. Now you're seeing smaller institutions reach out to larger institutions. And that's something that, in the case of Launch Credit Union, who we're merging with here this year. They are a financially sound institution. They do not need to merge, at least not yet or not in the next few years, but they are seeing kind of the writing on the wall, like to be able to do all of the things that they want to do. They see the need for the scale. And they've been a very innovative credit union, but they see that they need that scale to be able to have more impact and be able to do more what they want to do. And it very much aligns with Suncoast.

[Vinny, 00:19:18]

Ben, Vinny again. Real quick, I sort of, maybe just switching gears a little bit to your sort of observations are in terms of that Southwest Florida real estate market. Certainly, I've got family who kind of moved out of that area, have actually come home. I got family that are still there. Love it. It's such a beautiful part of the country. You folks are a large part of your network is through Southwest Florida. I'm just kind of curious; you probably have visibility into analytics in terms of the real estate market there right now. Obviously, there's some storms that came through, et cetera, insurance caused some havoc. How would you characterize that market right now? Like, what is your outlook for real estate growth in Southwest Florida moving forward?

[Ben, 00:20:01]

Yeah, the real estate markets certainly stabilized. I think over the past 12 months, I think since we got hit by the two back-to-back hurricanes in late 2024, that's certainly had an impact, certainly on our members, but also just on the real estate market as a whole. And you're seeing a lot of the aftermath of that. So, prices have stabilized, even come down a little bit, I would say, over the past 12 months, but nothing drastic, nothing to be concerned about, at least not yet. And we still see that there's an inventory problem, a shortage, and builders are still building. I think what we're seeing more of the issue on the real estate side is affordability. People can't afford the real estate given the price appreciation that we've experienced over the past five, seven years, I would say, I mean, property values have more than doubled. And, you know, it's a desirable area. You've got, you know, you've got a lot, there's a lot to offer here. There's the beach and, you know, and you look at the amenities of living on the Gulf. And it's a highly sought after area, so much so, that people in their current homes are having that are paid off or having trouble keeping up with the property taxes that they have to pay. So much so, that the governor has just announced, or it'll be on the ballot, to potentially abolish property taxes for on their homestead exemption. So, they're trying to tackle the affordability issues. It's not just on the real estate. You're seeing it, you know, with insurance costs across the board. You know, you layer inflation into that, and fuel prices, and our members are feeling it. And, you know, it's not just our members. I think consumers is in general, it's becoming a lot harder to make ends meet these days given how prices have just been going up.

[Vinny, 00:22:03]

Well, it's interesting you kind of reference supply, and there was an article last fall in the Wall Street Journal calling one of the cities in Southwest Florida the worst real estate market in the country. And my parents were simultaneously selling a home there. And I've been back down there and visited recently, and it's a beautiful area, but the amount of building that's going on simultaneous to the housing supply growing, I'm like, wait, does this work? But it's just, it's crazy to see it.

[Ben, 00:22:31]

It's a sought-after area. You go down to Fort Myers, Naples. I mean, it's beautiful, beautiful areas on the coast that people are trying to move to. And Florida is an attractive state in general. There's no income tax here and there's a lot of retirees here. We've got a lot of snowbirds that come down here. So people are here and it's a growing state. I think we were just looking if demographic data continues to grow, maybe not at the same clip as it has over the past few years, but net Florida is still growing its population. People are moving here still.

[Zach, 00:23:05]

Ben, economics aside, because I know that there's certainly challenges with affordability, and things like that could be a challenge to growing and to continuing to kind of thrive like you folks have, but from an industry kind of standpoint, what do you see in your seat as kind of the biggest threats to banks and to credit unions over the next couple of years? Or what are the things that you guys are trying to protect yourselves against in the outside world?

[Ben, 00:23:33]

Yeah, I think regulatory complexity and costs continue to increase, particularly for institutions that get to certain thresholds. Compliance expenses are growing faster than assets. Creating scale disadvantages for some of the mid-size institutions that lack some of the efficiency of the larger banks, but that face kind of those similar burdens. So, I think, again, regulatory complexity continues to be a burden. But I think some of the things that we're seeing is also FinTech disruption that continues to accelerate. We have some digital-first competitors that are essentially unbundling financial services, and they're targeting the most profitable products and then offering superior user experiences, oftentimes given some of the platforms that are coming out. And then they're not burdened by some of the legacy infrastructure or branch networks that a lot of the banks and credit unions have, which allows them to move faster and then maybe even price more aggressively on specific products. That being said, they also have their own sets of challenges that they're fintechs, they're not banks, they're not credit unions. They don't have the balance sheet capabilities that we have, which serves sometimes as an opportunity more than a threat. But at some point in time, if they're able to start balance sheeting or taking on those bank charters or those credit union charters, and they can start, they have their own balance sheets to work with, it's a significant threat out there.

[Zach, 00:25:14]

It's very consistent, I think, with what we hear, and like you said, it's not going away anytime soon. Ben, my last question, it's kind of the same circle here, but also you may have mentioned earlier, in terms of AI and some things that are changing, obviously, and we're talking about culture and branding and things like that. But is there anything that you guys are doing from the AI perspective that is helping you guys? Because I think people view it as an opportunity, but there's definitely people view it as a threat. So I'm curious, kind of your view on that general AI topic and how you guys might be looking at it at Suncoast.

[Ben, 00:25:50]

My personal view on AI is that short term, it is absolutely an opportunity. Long term, it could be a threat. Like, we could all be replaced by some of these, I guess, the artificial intelligence that's developing that's out there. At Suncoast, we are leaning into AI. We have several initiatives that are rolling out. We've actually hired some expertise and a team to help roll out some of these initiatives, including an agent on the collection side, an agent on the call center side to be able to support on that front and incoming calls, and an agent on the lending side that can help support. Now, there's very strict rules around, you know, letting agents or AI agents make lending decisions. So, you know, it's a fine line, you got to walk there. But then there's also all the internal. So those are ways that we're leveraging other systems, AI agents that they've built and implementing those here at Suncoast. We're also looking at homegrown solutions and looking at rolling out some agents in various departments to help and support departments. And that goes with all the complexity and teaching those bots what you want them to learn and how to answer questions and the framework that they should be operating under. And then there's a whole training side of things. Training our teams to use the tools, how to use the tools, how not to use the tools, which is just as important, and giving them the right tools. We have a team of application developers, giving them some tools. I mean, they can turn into 10X productivity by allowing the tools to code, and they just have to go in and verify the code after the fact. And it's never perfect, and so that's something that we're working towards. But there's a lot of opportunity there. Right now, we're seeing it mainly on the productivity side to be able to support our team members, and essentially take out some of the mundane tasks, oftentimes, and make their jobs a lot more interesting and analytical.

[Zach, 00:28:13]

Ben, that's a terrific answer. I always like to hear the use cases, right, because the headlines is; oh, everyone's doomed or everyone's, there's so many opportunities. So, it's always helpful to hear how people are actually using it. And we had our colleague, Justin Backs, just wrote our bolt in this month on AI. And the too long didn't read is really, it's a, hey, there's a lot of opportunity here, but you got to do the work, and you got to solve problems. Like all these things you mentioned, to me, the theme was you're solving problems with AI, right? You may not be replacing people, but what you're doing is you're trying to have AI help your current folks solve problems, which I think is a really helpful way to look at it. And he did a great job with the article, but I think he did a really good job too, just explaining how, across a variety of areas, whether it's internally focused or using external folks, you're able to use this to help make you guys more productive and kind of get you on your way to achieving that kind of North Star as you mentioned. So that's all I had from a question perspective. Vin, do you have anything else?

[Vinny, 00:29:14]

No, summed it up perfectly. I’m definitely going to stay tuned and watch the credit union grow. Something tells me that you folks are probably going to get 2 to 2 1/2 million before we probably would guess you would. And sounds like, I mean, you're certainly in the market gets to do it, and your mission and your focus on the member and that whole experience and serving folks that could really use that help, my guess is you're well on your way. And it was an absolute pleasure, and we're very appreciative to speak with you today. So thank you very much, Ben.

[Ben, 00:29:46]

Thank you very much for having me, and that's what we're here for, and we're going to continue to live our mission, and I appreciate your time and the conversation.

[Zach, 00:30:03]

And we're back. Great to have Ben on the show. I thought he had some terrific insight. And it was really kind of fascinating to hear about how they've grown, how they're managing it. And I think from a takeaway perspective, I mean, there's a number of them that we can certainly talk to then, right? But the stuff at the end about AI, I think it's maybe a little cliche because everyone's talking about AI right now, but that really fascinates me. It's not the theory behind it, whether it's an opportunity or whether it's a threat; to me, it's the use cases. I want to see more of how people are using it. And I think Ben gave a couple kind of concrete examples there about internally. Some things they're doing from the training side or from the teaching educational standpoint, but also he mentioned the call center collection, some lending’s things within reason that they're trying to make themselves more productive and actually use it for more than what I think people criticize it for as a glorified search engine or something that we don't have to actually think. So, they're using it in a way that's going to make them more productive, that's going to just kind of help them reach their goals. I want to continue to kind of ask guests who come on, what they're using it for, because that to me is the key thing is, what are you actually using it for? And I thought he had a couple of neat examples there for how a pretty large credit union is trying to employ that. How about you, Vin, from your side?

[Vinny, 00:31:23]

Yeah, Zach, great takeaways there on the AI front. I would say the thing that stuck out to me was the differentiation between the credit union's focus on asset growth versus membership growth. And their focus is more specific, or as he alluded to before, their North Star would be membership growth and this idea that making sure that everyone who needs banking services that comes to them, they find a way to do so. And that loyalty would engender what then follows, which is asset growth. And so clearly, it's a strategy that has worked. I think you pointed out that they are the 10th largest by asset size, but the 7th largest by membership size, and that's, look, that's pretty impressive. And so, my guess is that's a great strategy. We'll see how it unfolds as they move forward. You just don't ever hear that as the focus. And so that's a every credit union in the country is going to tell you they're really membership driven and really membership focused, but they're explicitly saying the total assets are secondary to growth in our focus on our membership. So I thought that was really quite interesting, to be honest with you. But great conversation with Ben overall. Obviously, very impressive individual who's achieved a lot, particularly in the credit union space, so hope you folks enjoyed it. And we look forward to you joining us again for another great interview on On the Balance Sheet.

[00:32:58]

On the Balance Sheet is a podcast produced by Darling Consulting Group, DCG. All views and opinions expressed by the hosts and guests are solely their own and may not represent those of DCG. All third parties are independent entities and are not affiliated with DCG. This podcast is intended for informational and educational purposes only and is not considered as advice. All views and opinions expressed are based on the information available at the time and may have changed based on current market and other conditions. For more information about DCG, please visit www.darninconsulting.com or email us at info@darninconsulting.com. Today's background music is provided by John Sid and Como Media. It can be found on pixabay.com.

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