How A $40B Institution Treats 2.4M Members

By concentrating on member service, State Employees’ Credit Union has forged a path to continued growth.

 
 

CU QUICK FACTS

SECU
Data as of 06.30.19

HQ: Raleigh, NC
ASSETS: $40.6B
MEMBERS: 2,428,5120
BRANCHES: 266
12-MO SHARE GROWTH: 5.2%
12-MO LOAN GROWTH: 6.6%
ROA: 0.61%

State Employees’ ($40.6B, Raleigh, NC) might be the second largest credit union in the nation, but its localized approach to member service and network of 2,200 direct, in-branch lenders better resembles the way a group of much smaller credit unions would operate.

According to Mark Coburn, senior vice president lending development, the cooperative’s simple operating principle of “Do the Right Thing” says it all.

“We’ve grown because of the way we serve the members,” Coburn says. “Our culture is about wearing the white hat and truly acting as a trusted financial advisor.”

SECU’s Mission Statement: "To be the trusted provider of financial services to every eligible member and to enhance the value of their lives and financial well-being while maintaining our fiscal strength."

That culture has clearly resonated with the credit union’s growing membership base, which is currently more than 2.4 million. SECU serves those members, who are spread across North Carolina’s 100 counties, through its 267 branch locations, with at least one branch placement in every county. But the credit union stands out in ways beyond its scale. SECU doesn’t participate in indirect lending and it doesn’t price products based on risk factors like credit scores. The cooperative has never offered traditional incentives for its front-line employees and decisions all loans — even mortgages — in its branches.

Mark Coburn, Senior Vice President, Lending Development, SECU

Here, Coburn shares the thinking behind, and results of, some of these distinctive practices.

How has SECU kept its focus on member service as it has grown to more than $40 billion in assets?

Mark Coburn: By having local branches in our communities, we have direct access to our members. Even though we’re not a small-town credit union anymore and might not know every member, we still have that kind of culture.

The members are there for the service, and we never venture away from that or make decisions that counteract that. Even on the lending side, we talk about how organizational growth will help our members save money through better rates and fees. That is the emphasis, not growing by a certain percentage or increasing income.

It resonates with our employees to know we offer a service that helps members’ financial lives. It might sound cliché, but if we take care of the members, the numbers take care of themselves.

Why doesn’t the credit union participate in indirect lending or risk-based pricing?

MC: Regarding indirect, we try to never put a third party between the credit union and our member. That’s why we offer all financial advisory services and loan products in our branches. We want to protect our relationships and maintain that direct connection.

As far as risk-based pricing based on credit scores, we’re one of the few that don’t do that. We do consider the loan product and loan-to-value in our pricing model, but we don’t base pricing on credit scores. Every member in the credit union gets the same rate if they qualify for the loan. We feel that’s the fair way to do things, and it prevents us from getting too far from the real risk inherent in the loan and overcharging members.

We believe in our team of 2,200 highly trained, experienced lenders who are approved by the board to make loan decisions. They look far deeper than the credit score, which is just one component, to determine if the loan is good for the member and the membership. We make a lot of loans that other people don’t make, especially at the low rates that we charge, and our delinquency and charge-offs are very low. Since our rates are competitive for high credit score borrowers, we end up saving members on the medium to low-end of the credit scale significantly. That’s the beauty of how we save our members the most money.

SECU decisions all loans, even mortgages, in the branch. What kind of training does that require?

MC: We have an internal certification program that every lender goes through. There are online courses, including mortgage loans, and new lenders must pass a final exam. New lenders also attend a three-day course here before our board approves them to be a lender. Plus, there’s training and mentorship in the branch.

Continuing education and ongoing training are also critical. As we’ve grown and regulations change, we need to make sure all lenders remain up to date. We work closely with our education services department to create content to ensure our team has the latest information and resources.

The total financial value delivered to our membership in 2017 was over $1.1 billion.

Mark Coburn, Senior Vice President, Lending Development, SECU

From a quality assurance standpoint, the credit union reviews every local loan decision within 24 hours to ensure fair lending throughout the state and double-check the accuracy of the data entered by staff and members. In an estimated 2% of cases, the team finds inadvertent errors that can change a “no” decision to a “yes.”

Has the credit union ever offered incentives?

MC: No, no one has ever gotten paid on a transaction volume basis. That includes our lenders with mortgage approvals as well. There is an opportunity to earn an educational bonus for extra training or additional licenses, but the absence of any incentive or commission-based bonus is a differentiator for us. It helps us focus on what’s best for the member.

How does SECU measure its member impact?

MC: There are a couple of ways we measure our impact. Our member survey is one of them. We track how many members use us as their primary financial institution (PFI) in addition to their satisfaction. Our growth is another way to measure success. Last, but not least, we have an annual analysis that shows how much money we’re saving our members in North Carolina each year. The total financial value delivered to our membership in 2017 was over $1.1 billion.

SECU delivered more than $1.1 billion in total financial value to its members in 2017. Read all about it in the credit union’s financial benefits report.

What advice do you have for other credit unions who are looking to grow but want to maintain their member focus?

MC: It’s a question of where are you going to start? You might hear about topics like risk-based pricing or fees at a lot of conferences. However, we don’t always hear a lot of talk about service, and that’s where it all starts. That is the starting point for a successful institution.

We monitor our numbers, but that’s not the basis of our conversations. It’s not an either/or proposition. You can offer competitive products at large volumes and fair prices and grow. How do you best serve the members? That’s the starting point.

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Sept. 16, 2019


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