Today, September 3, voting begins in the most important election affecting credit unions in over 100 years. This is not the presidential election-as important as that is for national policy direction.
Rather this is the second consecutive year that the members of SECU NC can choose between two slates of candidates to fill four board openings. Ballots will be mailed to all members. Voting can be by mail-in ballot, on line (absentee) or in person at the annual meeting on October 8, 2024 in Greensboro, NC.
In 2023 the first year of contested board elections, three member-nominated candidates won their seats over the three-board nominated incumbents.
A Gigantic Precedent
SECU’s North Carolina operations are vast. From the President’s June 2024 Fiscal Year update:
The Credit Union, with 7,700 full-time and 500 part-time team members, serves members via 275 branch locations, ncsecu.org, our SECU Mobile App, ASK SECU (our automated voice response system), our 24/7/365 Member Services Support team, and nearly 1,100 CashPoints® ATMs.
SECU is America’s second largest credit union at $56 billion in assets and 2.8 million members. Its long term track record for over five decades includes a history of iconic and innovative service decisions founded on a singular vision of cooperative design.
This example of owners having a real choice of directors will have a significant impact on SECU’s members, the credit unions of North Carolina and perhaps public perceptions of how credit union leadership should be selected.
No other credit union, of which I am aware, has had back-to-back member voting in contested board elections. Just the opposite is the case. Board openings are routinely filled by nominating committees approving only the number of candidates as there are vacancies. These individuals are normally incumbents or internally sponsored. No elections are held. The chosen few are approved by acclamation at the annual meeting. The member franchise and democratic selection, the foundation of credit union governance, hardly ever occurs.
The Competing Slates
The two competing groups for the four open seats are the board-nominated candidates and the member-nominated group. In short, the Ins versus the Outs.
Brief profiles of all eight can be read at this link. The Ins are all current SECU board members who list multiple volunteer roles. The member-nominated are long standing SECU members including three former SECU employees. The 4th Jean Blaine did not work at SECU but lived with someone who did. She was a teacher in the public school systems in four different counties while raising five children. She has been active in the last two years at multiple public forums raising concerns about SECU’s direction.
A general statement of the four incumbents’ recent decisions is presented in this excerpt from the CEO’s August 2024 Fiscal Year update:
Our volunteer Board of Directors (composed of current, past, and former state employees representing your best interests (the interests of state employees)) took action to eliminate numerous fees at SECU. The Credit Union no longer charges a stop payment fee, NSF representment fee, overdraft transfer fee, verification of deposit fee, or a returned item fee! SECU’s fees are among the lowest in the country among our credit union peers.
To better serve all 2.8 million members, the SECU Board also made some changes to our tier-based pricing model (where loan rates are determined by a member’s credit score) on auto and consumer loan products. In April of 2024, the Board reduced SECU’s 5-tier model to 3 tiers, with A credit score borrowers receiving an A rate, B borrowers receiving a B rate, and C, D, and E borrowers, as well as borrowers with no score, receiving a C rate.
Before the introduction of tier-based pricing, SECU provided “one rate for all” that was a B- to C+ rate. The move to a 3-tier model also complemented the August 2023 rollout of a Board-approved 0.50% discount program1 on closed-end consumer loans for certain qualified current or retired State of North Carolina employees, adding even more value for SECU’s base membership.
The primary issues raised by the member- nominated candidates have been much covered in Jim Blaine’s daily blog SECU-Just Asking! These topics include the credit unions embrace of risk based pricing for consumer lending. More recently the decline in financial performance trends including growing delinquency/charge-offs, stalled share growth, and an increasing expense ratio.
Blaine has also been an ardent critic of bylaw and other process changes which make it more difficult for members to exercise their role at the annual meeting. For example this is his response to the restrictions announced for the upcoming 2024 Meeting: SECU Board Election Cycle-How Can It Get Any Worse?
Jim’s writing is blunt and pointed. He uses memes to reinforce his message. For example his recent blog supporting the four member nominated candidates, lists five priorities under the general headline SECU Employees Need a Change at the Top.
The Campaigns
The Ins are certainly using the power and resources of incumbency to prepare and spread their point of view. The Outs have the passion and enthusiasm of volunteers committed to making a difference.
Both sides use social media. Ads and videos featuring their candidates are up or in the works. SECU For All is the campaign theme and the member-nominated web presence. The site has candidate videos, event updates, articles and statements from supporters. The group has also created a Facebook page: https://www.facebook.com/SECUforAll/
More SECU institutional updates are in the works to provide the positive points for the current board candidates priorities and accomplishments.
A Unicorn Credit Union
SECU’s position in credit unions combined with two contested elections makes it a true unicorn in the cooperative system. Member-owners have the unique opportunity to see how their candidates present themselves and their visions for the credit union’s future.
Although integral to cooperative design, members at no other credit union will have this distinctive experience of seeing contrasting positions from competing board candidates.
But the learning will be more than a debate about risk-based lending, financial priorities, or convenience upgrades. This voting choice demonstrates to these member-owners, and maybe others who read about it, the true nature of cooperative democratic governance.
If we are honest about the state of credit union governance today, most leadership teams (boards and CEO’s) view the members as customers. They are primarily inputs (profit centers) for their institution’s growth and financial success. The members are only a means to building public renown and rewards for the organization’s leaders.
In extreme cases this attitude results in the exploitation of the members’ trust when these leaders chose to transfer their institution’s resources and members to a third party for self-gain via mergers. It happens every week in plain sight. This is a recent example where five board members and the CEO chose to lead their 58,000 members and $1.3 billion institution into a merger (The Valley of Dry Bones). There was no rhyme nor reason, except the CEO’s retirement. And the members are led to believe their approval is just an administrative check the box exercise.
Following Future Events
SECU’s board election is about much more than a final vote tally in October. In my view it could be the one event that demonstrates the potential for cooperative design to fulfill its unique destiny.
I plan to follow events and the positions with more posts before the October 8th annual meeting. I believe illustrating both the tactics and substance of this campaign could be a turning point for other credit unions who wish to reinvigorate their institution’s distinct cooperative spirit.
For the full pdf package for SECU’s 2024 Annual Member meeting notice, click here. Per Sandra Jones, Senior Vice President for Communications, the October 8 Annual meeting will be broadcast live as in 2023.