Members of the State Employees’ Credit Union of North Carolina elected dissident members to the board of directors at the credit union’s annual meeting held Tuesday in Greensboro.
The vote effectively ousts three current SECU directors from the 11-member board of the second-largest credit union in the U.S.
The voting occurred over the past six weeks. The new directors each received more than 6,300 votes. They are: Michael Clements, Barbara Perkins and Chuck Stone. The three defeated directors, who had been endorsed by the SECU nominating committee, were veteran state government officials Alice Garland, Jo Anne Sanford and Thomas Parrish.
At the two-and-a-half hour annual meeting, more than a dozen credit union members and former employees criticized changes instituted by the SECU board in the past three years and its failure to offer competitive rates on deposits. A handful of members offered support for current leadership.
The critics’ most common complaint involved SECU’s use of risk-based lending for auto loans, which diverged from its tradition of offering the same interest rate to all members, regardless of their financial standing. SECU was among the few U.S. lenders to not offer tiered rates before the change started in March.
The election was being watched nationally by the credit union industry because of SECU’s large size, ranking behind only Naval Federal Credit Union with assets of nearly $50 billion. There are 2.7 million members of the SECU, only about 13,000 of whom voted either online or at the meeting.
CEO Leigh Brady called the vote disappointing, noting that those calling for a return to SECU’s traditions don’t understand its need to attract more business from members with strong credit. Those members are increasingly opting for rival lenders, which she says prompted SECU to make changes.
Brady says SECU is saddled with more than $9 billion of investments that are yielding less than 1% interest, along with billions of dollars of mortgage loans yielding less than 3.5%. That makes it difficult to raise rates it pays on deposits, she said.
The three elected directors were championed by former SECU CEO Jim Blaine, who used a blog to issue almost daily criticisms of the SECU board and management in recent months. Blaine, who was CEO from 1979 to 2015, said the voting reflected the will of SECU’s membership. He urged the board to open itself to more dialogue with members before making additional changes. He spoke during the meeting’s public discussion period, as did his successor, Mike Lord, who was CEO from 2015-21.
Brady said she would continue pressing for changes at SECU, including using credit scoring for other forms of loans. She also assailed Blaine, with whom she worked for more than two decades, for providing misinformation to members. “Jim Blaine doesn’t play fair,” she told reporters after the meeting.
Perkins, who is a retired CPA in Raleigh and former state employee, received 7,096 votes, the most of the six candidates. Garland, a former executive director of the N.C. State Lottery, received the fewest, 5,880.
The contention comes amid strong financials at SECU, though some metrics are weakening. The credit union reported record net income of $587 million in the fiscal year ending June 30, compared with $564 million a year earlier and $438 million in 2021. Return on assets was 1.18%, ahead of SECU’s target of 1%. The credit union has reserves of more than $5 billion, or nearly 10.5% of assets.
But assets declined nearly 7% during the year as some customers moved deposits to other institutions. Expenses rose to 2.35%, above SECU’s target of 2% as the credit union spent more money on technology and marketing.
