The State Employees’ Credit Union is reporting more delinquent borrowers as it boosts its lending.
The Raleigh-based institution said loans more than 60 days late surged 49% to $700 million, compared with $470 million a year earlier. More than three-quarters of the late payments were tied to home loans, with used-vehicle loans making up most of the balance.
SECU said about 20,650 loans were delinquent, about 5,500 more than cited in its 2023 first-quarter report filed with National Credit Union Administration regulators. Net charge-offs increased 50% to $72 million during the quarter, versus $47.5 million last year and $20 million in the same period in 2022.
(A previous version of the story reported a higher level of delinquencies of at least 60 days, cited in the credit union’s federal regulatory report. But that reflected a regulatory reporting quirk related to the number of days in February 2023 (28) versus February 2024 (29).)
“We do have members whose budgets are currently stretched by the higher cost of living,” SECU said in an emailed statement. “This financial strain has led to higher loan losses. Higher delinquencies and charge offs are being felt by the entire financial industry.”
Despite more delinquent home loans, SECU said it only charged off about $405,000 in home loans during the first quarter. The credit union is working with members to keep them in their homes. Increasing home values across North Carolina enables members to potentially sell their homes at a profit and avoid foreclosure, which also helps SECU more often recover the full loan balance, the credit union said.
Truliant Federal Credit Union, the second-largest N.C. credit union, had $39 million of loans delinquent at least 60 days as of March 31, compared with $17.5 million a year earlier, according to its regulatory report. Chargeoffs increased to $15.1 million versus $10.5 million last year. Assets totaled $5.56 billion.
Coastal Federal Credit Union, the third-largest N.C. credit union, had $22.9 million of loans delinquent at least 60 days as of March 31, compared with $15.5 million a year earlier, according to its regulatory report. Chargeoffs increased to $9.3 million versus about $6 million last year. Assets totaled $5.18 billion.
SECU is the nation’s second-largest credit union has offices in 100 N.C. counties and 2.8 million members and about $55 billion in assets. It remains well capitalized and profitable. As a member-owned credit union, SECU doesn’t seek to maximize profits in the same way as a commercial bank with shareholders.
It earned $65.7 million in the first quarter, compared with $143.6 million a year ago. That continues a trend of declining profit. SECU had net income of $364 million last year, compared with $626 million in 2022 and $557 million in 2021.
Net income has declined because SECU is paying greater interest to members, including a 130% increase in interest payments in the March quarter compared with a year earlier, the credit union said. Its interest rates on CDs, share certificates and money market accounts are competitive, officials said.
The institution also has boosted lending with total loans outstanding of $33.9 billion as of March 31, an 11.3% increase from a year earlier. Home loans accounted for about $26.3 billion, more than two-thirds of total volume.
In the past year, SECU changed its lending approach by providing better rates to members with stronger credit ratings. It previously had a flat-rate model that was unique among lenders.
Meanwhile, the credit continues to borrow $5 billion from Federal Reserve’s Bank Term Funding Program, which provided favorable terms to banks and credit unions after the March 2023 failures of Silicon Valley Bank and Signature Bank. The SECU borrowing started last July and the program runs through March 2025.
