Secret To SECU's Success? It's Not A Secret, It's Just The Basics
RALEIGH, N.C. — State Employees' Credit Union was a Top 10 lender in 2010, but it wasn't due to some sophisticated marketing strategy.
Instead, said Phil Greer, SVP-loan administration for the $21-billion SECU, it was just a case of a credit union being a credit union.
"We have remained true to the cause," said Greer. "When a lot of lenders tightened guidelines so far last year they weren't really available to people, we let our members know we were here for them."
The most significant growth SECU generated in 2010 was in mortgages and used car loans, with some growth in credit cards. Greer said declines in outstanding balances were seen in unsecured loans and new car loans because of 0% financing at dealerships.
SECU identified members who had a home equity loan with the credit union but not their first mortgage. These members received letters pointing out the benefits of refinancing their mortgages with their credit union.
"Once we talk with the members, we ask them to take a look at our car loan rate, also," he reported.
For 2010 SECU reported net income of $306.5 million, excluding NCUA assessments. It paid $52.9 million to the NCUSIF and $24.5 million to the corporate stabilization fund, leaving it with $229-million in net income. Its net worth ratio was 7.4%, making it "Well Capitalized."
Greer noted there is 9% unemployment in North Carolina, which means 9% of its members, in theory, are struggling day by day, but 91% of members are getting along with life as best they can.
"We are doing our best to serve both groups. We have not gone back and created more hoops for them to jump through because we are afraid of unemployment. We have not changed our guidelines or policies and have not raised rates."
Indeed, Greer said, SECU made few significant changes to its lineup of lending products and services. It added a few small signature loans, "but those wouldn't affect our overall volume. We have had the same credit card program we have had forever."
No Risk-Based Lending
SECU has "never done" risk-based lending, Greer said, adding credit scores don't mean much because the CU does not use them to determine to whom it will make a loan.
"The credit score does not tell you which member will or will not default. It just says a percentage of those with one score will default, and a higher percentage of those with a lower score will default. Our job is to make the determination which group the member is in by speaking to them about the reasons behind the blemishes on their credit report."
Some members have gone through a divorce, had health issues, or lost their job nine months ago and are back on the job now, he continued. SECU loan officers are trained to make the call as to which are the good risks and with are the bad.
"Our net charge-offs have ranged from 0.1% to 0.2% historically, and based on those percentages I think we do a reasonable job of determining which members to lend to because our peers typically are charging off 1% to 1.5% of their outstanding balances."
This success is continuing into 2011. Since Dec. 31, Greer said SECU's loan growth has proceeded at a quicker pace than it did in 2010. In January it had a $54-million increase; in February it had a $53-million increase.
"Used cars, mortgage loans and credit cards are strong," he said.