Valley Strong: Giving Credit Where Credit is Due

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Valley Strong Credit Union leads by blending values and clear vision

In 1938, a group of teachers in California’s Central Valley created a financial cooperative in a tiny room in the Bakersfield High School library. One volunteer kept the co-op running, and receipts were kept in a shoebox. By the end of that year, the organization that would become Valley Strong Credit Union had 141 customers and $1,300 in assets, a respectable achievement given their modest means.

With a mission to help people and communities prosper, the little co-op that could has grown to serve more than 260,000 members in 10 counties, has nearly $3.5 billion in assets, and is one of the Central Valley’s most impressive community leaders. In 2020, the credit union converted from a federal charter to a state charter to broaden its field of membership, putting it on a serious growth path.

To put it another way, Valley Strong is not your parent’s credit union. It has embraced a culture that boasts a super-sized leadership talent pool, an emerging tech stack and a scale and growth philosophy. It is a credit union on the go.

Central to Valley Strong’s growth strategy is a deposit-first approach that focuses on non-maturity share deposits, checking accounts, money markets, and labor savings accounts. “Core deposits are so important. They keep our cost of funds low, they provide great loyalty, there’s great cross-sell opportunities, and that allows us to make more loans,” said Nick Ambrosini, the organization’s president and CEO. “From there we can continue to build products and services with our members throughout that life cycle.”

The best two years for loan growth in Valley Strong’s 84-year history were in 2020 and 2021; in 2021 they were in the 99th percentile for loan growth across the entire industry. Valley Strong grew its lending from about $800 million to more than $2 billion during that time frame. Fears that the pandemic could lead to another Great Recession motivated many financial institutions to restrict or freeze lending. In a bold move, Valley Strong doubled down to meet the needs of those left out in the cold.

“We actually expanded some partnerships during that time,” he said. “It worked out well for us because so many people pulled out of different partnerships or different relationships, and we stepped in. When those people tried to come back, we’d already moved them out of the way.”

In addition to providing banking and wealth management services to its members, Valley Strong is dedicated to improving the lives of everyone in their service area in several compelling ways.

They leaned into that commitment even more during the COVID-19 crisis, making seven-figure charitable contributions to several initiatives designed to fortify their communities. In one such effort, a public-private collaboration designed to create a more prosperous future for the region, led by the Brookings Institute, the credit union was one of only a few private organizations invited to participate.

In addition to supporting innovative educational opportunities, they contributed to a regionally based venture group that increases the availability of capital to startups in the Central Valley. “From a community standpoint we know the impact that providing greater access, whether to education or capital, equals so much prosperity in our communities and we try to do that,” Ambrosini said.

Partners for prosperity

Valley Strong’s embrace of technology is another way they fulfill their service mission. At present, they are partnering with Figure, a pioneering blockchain-based lender founded by SoFi CEO Mike Cagney. Traditionally, the process of securing a home equity line of credit took 30 to 45 days; using blockchain technology, the entire process from application to funding, Figure can do it in five.

“That's extremely disruptive and you can see the mass of benefits that it creates for the borrower and the lender,” Ambrosini said. “We partnered early on with them, and it's been an extremely rewarding partnership.”

To build their omnichannel strength, Valley Strong is partnering with digitalization specialists Eltropy for AI and machine learning-powered communications. “We're going to be looking at some conversational AI chatbot type features as well,” he added. “We see it as a great efficiency and a way to augment our call center.”

The organization is also considering partnerships with other AI providers to help improve their fraud detection. Ambrosini noted that the credit union’s strong financial performance enables them to better guard against crime. “When you have a positive ROI, you're able to be more vigilant in the ever-changing fraud landscape,” he said.

Their digital transformation also touches the user experience side. “We continue to look at ways to remove friction and improve UX, and we're looking at our tech stack and how we can potentially be more agile,” he noted.

Valley Strong also is implementing integration software from MuleSoft to reduce their reliance on legacy core technology.

Because opening a bank or credit union account can be time-consuming and frustrating, they have partnered with digital account opening platform developer Terafina to streamline that experience on both sides of the teller’s desk. “We are really excited for the partnership with Terafina and the friction that they're removing from our processes,” Ambrosini said.

The organization is using RPA (robotic process automation) to help slim down the volume of manual tasks in the back office, especially when it comes to processing mortgage and solar loan applications, which notoriously requires mountains of paperwork. Augmented and improving certain workflows using RPA allows Valley Strong to build scale without significantly expanding their FTE roster.

Speaking of employees …

The organization is undertaking a culture transformation. “As we sought to go into a more growth-oriented strategic plan, we knew that the culture was going to have to align to that,” the CEO explained. The CU engaged an independent consultancy to oversee the work and eliminate the perception of inherent bias.

Three overall themes emerged from those efforts: digitalization, talent and mindset, and scale and growth. Leadership created an aspirational proposition to help steer the effort and focus on the most meaningful approaches to the culture reset, including sharpening a laser focus on members and team members, embracing diversity, equity, and inclusion, taking a more data-driven approach to the business, inspiring more innovation, and accepting that change is perpetual.

“We try to have joy in our work and have fun, and then innovate boldly. We talk about dreaming a lot and challenging the status quo,” he said.

The emphasis on culture is part of the credit union’s drive to become a destination workplace, and to be viewed as the top employer in every market they serve. In line with that, they took a bottom-up approach to creating a new set of core values rather than granting them from on high, as so many organizations make the mistake of doing.

Attracting and keeping talent is essential to the success of their plans for advancement. “Having the right people in place to lead the organization and to lead key verticals is incredibly important, so we’ve spent a lot of time over the last 18 months improving our bench strength and improving some of our leadership ranks to really put us in a position to take advantage of growth opportunities going forward.”

Indeed, in the past several months, Valley Strong has hired six C-suite executives, all of whom are women and/or people of color. Their backgrounds are impressive, including JPMorgan Chase, American Express, and Goldman Sachs, to name a few.

Valley Strong also reworked their pay scale, increasing their minimum pay to $17 an hour, and adjusted roughly 75% of the organization to compensate for the increase in the minimum pay.

“We feel we have an equal responsibility to our team members in that we lead by example and that we take care of our team,” Ambrosini said. “Without an engaged team you're not going to be able to supply that service to your members. We try to find that balance there.”

Valley Strong’s transparent and daring efforts to transform the typical banking workplace reflects the diversity and spirit of the Central Valley communities that they operate in, and that they clearly love. And that may just be the greatest growth engine of all.