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Saturday, May 18, 2024

Local Government credit union shifts, says it will add branches

Local Government Federal Credit Union, one of the state’s biggest financial institutions with $3.8 billion in assets and 400,000 members, is shifting from its plan to be an all-digital operation.

In an email to members, the Raleigh-based credit union says its affiliate, Civic Federal Credit Union, plans to open 11 branches in the following cities: Ahoskie, Asheville, Charlotte, Greensboro, Greenville, Hickory, Lumberton, Mt. Airy, Murphy, Raleigh and Wilmington.

A Local Government spokesperson says the credit union is focusing on its members. The credit union hasn’t detailed its investment for the branches.

Since its formation in 1983, Local Government has been tied at the hip of the N.C. State Employees’ Credit Union, which has $50 billion in assets. There are no Local Government branch offices; instead, members use SECU’s 273 branches as needed. The smaller credit union directs 25% of revenue to SECU, or more than $40 million annually.

Earlier this year, Local Government agreed to sever its financial ties with SECU over the next year, with plans to end full-service access for members at SECU in June 2025. Local Government’s members would instead transact their business exclusively through digital channels, CEO Dwayne Naylor said. He called it a response to members’ desires and noted that fewer than 17% of member transactions occur in a branch.

News of the change prompted some protests across the state from Local Government members, according to various media reports.

This week, Naylor emailed Local Government members with news of the branch additions. The 11 locations will be within 30 miles of 80% of the credit union’s membership, he said.

More than 400 members and SECU staff attended meetings earlier this year that identified branch locations and cash deposit solutions as key issues, Naylor’s email said.

N.C. state and local government employees were part of the same credit union until 1983, when a new structure was set up after complaints from some N.C. bankers. Local Government credit union served city and county employees and had its own management and board, but it didn’t operate branches or have loan officers.

Over the last decade, Local Government leaders discussed a split that would allow for new services and a more notable brand. That led to the 2019 charter for the Civic credit union, a solely online operation that has essentially the same leadership as Local Government.

Local Government membership has increased more than 35% since 2016. Civic has about 5,000 members.

Civic’s technology infrastructure can handle massive growth, enabling the split from SECU, Naylor said. With revenue that previously went to SECU, Local Government said it expected to add about 150 workers to complement its 215 existing staffers with a goal of providing better customer service, Naylor said.

Local Government’s contribution makes up a fraction of SECU’s $1.5 billion-plus in annual revenue.

 

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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