RALEIGH, N.C. — Civic Federal Credit Union recorded a $47.2 million loss during the first half of 2026 as assets and membership continued to decline following its separation from State Employees’ Credit Union and merger with Local Government Federal Credit Union, according to a new analysis.
The $3-billioncredit union, which serves employees of North Carolina city and county governments, recently completed its first year operating as an independent financial institution.
According to its mid-year 5300 report, as cited by BusinessNC, Civic reported:
- A net loss of $47.2 million during the first six months of 2026, following losses of about $124 million in 2025 and $1.6 million in 2024.
- Assets of $3.07 billion as of June 30, down from $3.3 billion at year-end 2025.
- Membership of 336,107, a decline of about 19,500 members, or nearly 5.5%.
- Loans totaling $2.7 billion, including $171 million that were at least 60 days delinquent.
- A 60-day-or-more delinquency rate of 6.3%, an improvement from $225 million in delinquent loans at the end of 2025.
Civic was an outlier among North Carolina’s largest financial institutions in 2025, BusinessNC reported, noting that each of the state’s 50 largest banks and credit unions was profitable last year except Civic and two credit unions with combined assets of $13 million, according to S&P Global Market Intelligence data cited by BusinessNC.
Part of Strategy
Civic said the losses are expected and part of its strategy.
“The financial challenges reflected during this period were expected and were incorporated into our long-term strategic and financial plan,” Civic said in a statement provided to BusinessNC.
The credit union said it is in the second year of a five-year transition strategy and that “these planned losses are a deliberate part of that roadmap. Our focus has been — and continues to be — building a stronger, more sustainable organization that is positioned to serve our members well into the future,” Civic said.
The first-half results cover the tenure of CEO David D’Annunzio, who was promoted from CFO in January following the retirement of Dwayne Naylor.
Naylor, a 40-year credit union industry veteran, was a key architect of Civic’s June 2025 merger with Raleigh-based Local Government Federal Credit Union. He championed the combination as part of a strategy to create a financial institution focused more heavily on digital transactions rather than a traditional branch network, BusinessNC stated.
The CU Daily had coverage of the credit union combination and its spin-off from State Employees Credit Union here.
Initial Road bumps
The transition did not go smoothly initially, BusinessNC reported.
The transfer of more than 400,000 Local Government accounts to Civic encountered problems, with thousands of calls involving member account issues overwhelming Civic’s customer service hotline. The difficulties contributed to membership losses and costs that had not been anticipated.
The merger also surprised some members despite extensive efforts by Local Government to notify them about the transaction and the creation of an independent Civic, according to BusinessNC.
A major part of the change was ending Local Government’s longstanding formal relationship with State Employees’ Credit Union, the second-largest credit union in the U.S.
The $60 billion SECU had provided Local Government with back-office support and other services in exchange for an annual fee that totaled $63 million in 2024. The arrangement also allowed Local Government members to use SECU offices for certain financial services.
Several years before the merger, Naylor and other Local Government executives concluded that ending the SECU relationship would ultimately benefit their credit union, even though members would lose free access to SECU’s extensive branch network.
Branches are Added
Local Government launched Civic in 2018 as an affiliated online operation. Civic later added 11 branches after receiving feedback from members.
Civic described completion of its first year as an independent institution as “a significant milestone in our organization’s evolution,” BusinessNC reported.
“This transformation has enabled us to modernize how we serve our members by delivering the convenience, accessibility, and digital capabilities that today’s consumers expect, while expanding the value and services available through membership,” Civic said.
While Civic continues to report substantial losses, its delinquency numbers improved during the first half.
Civic reported $171 million in loans at least 60 days delinquent as of June 30, representing 6.3% of its $2.7 billion loan portfolio. That was down from $225 million in delinquent loans as of Dec. 31.
By comparison, SECU reported $920 million in loans at least 60 days delinquent as of June 30, equal to 2.4% of its $38.7 billion loan portfolio, according to BusinessNC.
SECU reported net income of $216 million during the first half of 2026.
