Happy Groundhog Day.
The North Carolina State Employees’ Credit Union is such an integral part of our state that it’s often taken for granted.
There’s nothing like it across the nation, I learned, while studying the $53 billion dollar enterprise for a story in the February Business North Carolina. In the ninth-most populous state, SECU dwarfs peers nationally other than he national Navy Federal Credit Union. California, Texas and New York have much smaller government-employee credit unions compared with SECU which has 2.6 million members, or a fourth of the N.C. population.
SECU is also very profitable, with capital that exceeds regulatory requirements. It has limited interest-rate or credit risk. It caters to member-owners because credit unions don’t have stockholders.
SECU is a maverick. It offers the same rates for deposits and consumer loans for all customers, regardless of their net worth or financial status. Michael Jordan would get the same savings account interest and pay the same mortgage rate as the person sweeping the Spectrum Center floor. Other financial services company use credit scoring to offer better rates to wealthier customers.
Self-Help Credit Union co-founder Martin Eakes, a progressive-leaning expert on banking, calls SECU “the single best credit union in America, serving working-class people in every county in North Carolina.”
But a couple of years ago, SECU’s board of influential state-government executives concluded privately that some change was needed. They want SECU to rethink how to balance its historic focus on core state employees with desires of more affluent members, many of whom also trade with other financial institutions. The board also favored making business loans and adding better technology.
In 2021, the board hired a veteran credit-union industry executive and regulator to usher in changes. New CEO Jim Hayes rolled out plans for new deposit and loan pricing strategies, business lending and improved technology. The pending changes have received little publicity.
The BNC story describes why two former SECU CEOs, who dominated the organization’s strategies over the last four decades, are vehemently opposed to the board-mandated changes. They say the moves will negatively affect a majority of existing customers and SECU's culture.
Former CEO Mike Lord, who preceded Hayes, says SECU can grow effectively by lowering its loan rates and raising its deposit payouts for all customers, rather than creating tiers.
A veteran industry consultant sums it up this way: Will SECU remain distinctive or follow the track of many other credit unions, which increasing look like stockholder-owned banks?