Anatomy Of A Loan: An Update On State Employees’ Credit Union

SECU of North Carolina brings its focus back home to ensure it is taking care of its Tar Heel State members.

In 2010, Callahan Associates took a trip down to Raleigh, NC, for a two-day on-site visit with the executive team of State Employees’ Credit Union ($26.75B; Raleigh, NC). The resulting in-depth profile of SECU’s lending philosophy and strategy marked the launch of Callahan’s quarterly Anatomy series.

Anatomy Of A Loan debuted in the fourth quarter 2009 issue of CUSP and contained the insights of nearly a dozen SECU executives, managers, front-line staffers, members, and volunteers. The feature focused on SECU’s decentralized lending strategy and highlighted a few of the credit union’s specialized loans, all of which the credit union holds in portfolio.

The credit union is still an active lender, and recession be damned, its philosophy has never changed.

Since 2010, the thing I’m proudest of about our organization is, when the banking industry pulled back from the borrower, we waded in, says Jim Blaine, CEO of SECU. We have had growth in our loan portfolio, it’s been minor at some points compared to the past, but we continued to lend and we worked out plans to help folks who got behind on their mortgages or lost their jobs.

SECU continues to be a major provider of mortgages for its members, 81.3% of its portfolio is dedicated to first mortgages while another 5.09% goes to other real estate. Consequently, the credit union’s average loan originated as of June 30 was slightly higher than its asset and state peers $27,481 versus $21,224 and $18,553, respectively. The credit union also still steadfastly refuses to use automated underwriting for its $14 billion loan portfolio, opting instead to review each applicant on a case-by-base basis. SECU’s loan-to-share ratio is 57.31%, which is below the average of peers in its asset class and the average of credit unions in North Carolina.

It’s that kind of consideration that makes SECU feel like a small, intimate financial services provider. In reality, SECU is the second-largest credit union in the United States in terms of assets and members, topped only by Navy Federal, and holds the third-largest loan portfolio after Navy and Pentagon Federal Credit Union. Its 12-month loan growth was 3.73% as of June 30, according to Search Analyze data on, which, as Blaine alluded, is lower than its asset and state peers.

SECU was chartered in the summer of 1937 with 17 members and $437 in assets. The credit union serves employees of the state of North Carolina and their families, and it serves a lot of them. SECU’s membership has swelled to more than 1.8 million today.

We have grown consistently with a net growth of between 75,000 and 100,000 members per year, Blaine says. Its 12-month member growth according to Search Analyze data on is 3.69%, above the average of its North Carolina peers as well as the industry average.

How Do You Compare?

Check out SECU’s performance scorecard, then build your own peer group comparison.

In part, Blaine attributes the credit union’s growth to North Carolina’s rapid population growth. From 2001 to 2011, North Carolina’s population grew 18.5%, compared with 9.7% for the United States overall, according to the U.S. Census Bureau.

With that kind of growth, SECU is returning its focus to its home state.

We’ve told our members who have moved out of state that we will no longer be focusing on serving anybody outside of North Carolina, Blaine says of the credit union’s new policy that began this year. We have members in every state, but we’re saying if you’re moving to California, then you should join a local credit union or local community bank. They can serve you better. We’re not geared up to be able to do that.

The credit union is, however, geared up to serve its North Carolina members. In 2011, the credit union completed a delivery system that includes local branch offices in each of North Carolina’s 100 counties.

That’s been a 40-year effort, but we can now say we’re convenient in terms of local service, Blaine says. We still believe that local branch delivery is the deciding advantage we have.

SECU, which does not participate in shared branching, had 249 branded branches at midyear. Compare that to the 22-branch average of credit unions with $1 billion or more in assets and the six-branch average of North Carolina credit unions, and it appears SECU decidedly does have an advantage. Despite its number of branches, SECU serves more members per branch, 7,378, than either its state peers, 5,749, or all credit unions nationally, 4,698. However, it serves fewer members per branch on average than its asset-based peers, whose second quarter average was 8,747.

Today, the credit union is continuing its commitment to helping its members. At the beginning of 2013, it launched SECU Life Insurance Company, the only life insurance company based in North Carolina, to offer life insurance products to its members.

Forty percent of the folks in this country don’t have life insurance, Blaine says. Many of the rest of them get their insurance through their employer. Are you comfortable that you will be working with your employer forever anymore? No. You need to have insurance at a neutral, independent site. We think credit unions are a great place [to have life insurance].

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October 14, 2013

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