Jim Blaine is CEO of State Employees Credit Union in North Carolina, the nation’s second largest credit union. It has $14 billion in assets, 1.5 million members (nearly all in North Carolina), 210 branches, 900 ATMs, and 4,000 staff. Basically, SECU is a single sponsor credit union, its FOM being state employees, public school employees and their families. Last year the capital ratio was 7% and ROA “minimal owing to a flat yield curve.” But Blaine says the financials are on target, healthy and supported by the Board.
What are you planning to do this year?
We have an ambitious program of both infrastructure improvement and products to help members.
Start with the infrastructure.
Much of this was planned and forecast years and months ago. We are replacing our branch teller system with one that will be card-activated. The card will have the member’s picture, so this will help with identification and prevent fraud. The card will be linked to cash dispensing machines, and there will be other features as well. In addition, we are revamping all our ATMs for greater security while adding access for the visually impaired. New scanning and imaging systems are also being installed.
We are also converting to a Voice-Over-IP system – voice and data will travel through the same pipe. We’ll be able to transmit more data while also reducing costs. This will become increasingly important as imaging takes hold in earnest at SECU. An added benefit will be that in rural North Carolina where jobs are scarce we can hire new staff to attempt a “virtual” call center. The main work will be done at the larger call centers, but the local “virtual” call center employees will be the persons taking many of the calls. Thus we’re working at “on-shoring” rather than “off-shoring” SECU jobs; we’re “in-sourcing” rather than “outsourcing,” too. We want to be an engine for further economic growth in North Carolina.
What programs are you going to launch to raise member value?
There are a number of these, all with the impetus of delivering better value and making member lives better. One is what we call the All-Savers Mortgage. Many of our members are young and renting, but rent is so high they can’t save for a down payment. We have surmounted that obstacle with the All-Savers program. We are expanding our long–standing 100% First Time Homebuyers mortgage. We are increasing the program to a 110% mortgage. This gets you a 15-year 100% fixed-rate mortgage plus 10% goes into a 10-year CD that earns the same rate as on the mortgage. The CD thus creates a pool of forced savings that members will have at maturity for their children’s college or whatever purpose – it’s up to them! With this program, they can get into a house sooner; they can benefit from the mortgage interest deduction; the value of their home rises; and they are free and clear in 15 years. We can get them a 15-year payment at almost the payment level for a 30-year fixed at other lenders. So, we have saved them 15 years of mortgage payments!
What about for non-home buyers?
We have lots planned for them, too. We believe that many of our members could benefit from financial education which helps “create wealth.” Mainly our members are teachers or state employees, persons whose incomes are steady but make it hard to put aside savings. Building wealth is tough. Part of the effort is simply to help members to “conserve” their discretionary income. Energy efficient light bulbs are an easy example which could save members $30 a month on their utility bills! We are also going to roll out completely commissionless wealth building products. The SECU employees who will be the brokers, trust agents and insurance agents will be the same employees in the branches the members have always known. We want those members to feel that they are getting absolutely the best wealth building advice possible and no hidden agendas—that every piece of advice is totally for member benefit.
Are there specific products?
One we are calling a Bridge Account. It features education in investing with no-risk to principal. It introduces people to risk/reward wealth building in an easy way and leads to other investment vehicles later on. A Bridge Account is tied to the S&P 500, but it is like a share account in that it is on our books and is federally insured. Persons place savings in the account. If the S&P 500 rises, they can make up to 3% per quarter (12% annually!). If the S&P 500 goes down, the worse that can happen to a person’s savings in the account is that it earns no interest. So all the momentum is on the upside. There is a $3,000 limit to the account. Monies above that amount can be invested in a low-cost Vanguard mutual fund, where, of course, downside movement is possible, but the opportunity for capital appreciation is greater. We believe this program will help get members acclimated to and educated in mutual fund investing and thus launched on their way to building wealth.
As an institution, will you be reaching out to the community?
We feel this is very important. We will continue through our SECU Foundation to award a $10,000 scholarship in every high school in North Carolina. We are also supporting the SECU Family House to provide no- or low-cost interim housing for families of transplant patients at Memorial Hospital in Chapel Hill, one of our core groups. And we are building a 24-unit “teacherage” in rural Hertford County. The apartments will be built with an interest-free loan and the county will own it in 15 years. Teachers will be living there at a very low expense—even rent-free. It’s a new way to help recruit teachers to a rural school system that desperately needs them.
We very much champion this state, and I think the fact that we do so is understood and appreciated. Ninety-nine percent of our loans for homes, cars, and education are reinvestments in North Carolina – we are the ultimate CRA machine for North Carolina!