Anatomy Of A Loan

On a cold, overcast morning in early February, members walking into any of the 227 branches of State Employees Credit Union in North Carolina likely take little notice of the human-sized mirrors bearing the slogan Meet SECU’s Owner…You’reLooking Good. The mirrors are present in most branches and they reflect not just the membership but also the true philosophy of the credit union.

We try to practice what we preach, says Jim Blaine, president and CEO of SECU. We treat members as human beings, just like you want to be treated.

SECU started out as a short-term lender, and it continues to meet the needs of its members today by providing loans at a low, reasonable cost. Indeed, lending that is, being a source of credit is the primary function of manycredit unions. For SECU, providing loans at a reasonable cost means throwing the idea of risk-based pricing out the window. Instead, the credit union considers every loan application on a case-by-case basis.

The credit union’s lending program is designed to give every member a voice, and the credit union listens. When approving or denying loans, every care is taken to consider why members are where they are financially and the reasons that support whymembers can, or can’t, repay a loan. Members that have good reasons for credit blemishes but still represent an acceptable risk to the credit union will likely earn the chance to repair their history and re-establish, or begin establishing,clean credit. It’s one way the credit union uplifts its members and puts them on a level playing field.

When you charge a higher rate to somebody who is struggling, it’s like throwing a drowning person a cement block. Blaine says. You’re helping to sink them. I think our system helps those that may have had some difficulty.It gives them a much better chance of regaining their stature.

Year over year, SECU grows its loan portfolio simply by loaning to its members, be they strong A paper borrowers or borrowers that need a little more faith put in them. This philosophy will serve the credit union well as it moves through2010. If 2009 was the year of the bailout when corporations and industries looked to the government to stabilize the pillars of the economy then 2010 is the year of the consumer. The political agenda is packed with itemsaddressing consumer policies and consumer protection as well as unemployment stabilization and benefits.

On the horizon are programs and recovery efforts geared toward improving the consumer condition. Now is the time to initiate programs in lending, and with smarter and more efficient efforts, credit unions can lead the lending market, even in the faceof returning competition.

We have to lend in order to get out of this recession, says Spencer Scarboro, senior vice president of mortgage lending. That’s what we’ve done in the past. I’m not sure why we should stop doing that, members needus more now than they did when things were prosperous.

Blaine agrees.

We have not restricted our policies, he says. We have not made credit less available. Credit unions are there for two purposes: to help create thrift and to provide lending. It’s not something we come in and out of. It’ssomething that we need to provide every day, all the time, at a fair and attractive, affordable rate.

And providing fair and attractive lending programs at an affordable rate is something SECU plans to keep on its agenda for the foreseeable future, but the desire to grow loans will not come at the expense of member financial health.

We try not to push members into any particular loan, Scarboro says. We try to do what is best for them, give them options and provide guidance if they need it, but we don’t push them into any particular product and we certainlydo not push them to get a loan when they might not need it.

SECU’s careful approach to consumer lending has not gone unnoticed by its membership.

I think credit unions are one of the best-kept secrets; you feel like you’re part of a financial family, says Richard Mizelle, a psychology instructor at North Carolina Central University who joined SECU in 1972. I’m notgoing to be left out there in a lurch like some people.