WASHINGTON– Two CEOs are sharing what they are calling “the most remarkable credit union story ever told.”

That story involves the soon-to-be operating independently of the $4-billion Local Government Employees FCU in Raleigh, N.C., which since its creation in 1983 has operated under the wings of the $53-billion State Employees’ Credit Union in the same city. SECU also handles the backoffice and branch services for other credit unions, as well.

During Mitchell Stankovic’s Underground meeting in Washington, the two CEOs of the respective organizations, Leigh Brady of State Employees’ CU and Dwayne Naylor of Local Government FCU and Civic FCU, shared what they called their “remarkable story.”

It Began in the 80s

Brady: Back in the early 1980s State Employees Credit Union had branches in numerous places and we wanted local government employees to take part in the credit union and thought that’s a no-brainer. The bankers said no way and (wanted them kicked out). We said, ‘Heck no, they’re not kicking them out,’ and we formed Local Government FCU in March of 1983.  They have used our branches ever since; we are the bricks and mortar. 

We’ve grown their credit union for them and have loved their members for over 40 years.

But they are growing up and they’re bored and they decided they’re getting out of their parents’ basement. They are 400,000 members strong and have $4 billion in assets, and we have spent the last year and a half to three years working on…a separation of the credit union.

Others CUs Served

We also used to do all the back office processing for Latino Community Credit Union, which was formed in 2000 because Latino immigrants were being wronged. They have their own branches, 150,000 members, 15 branches and a billion-dollars in assets. They separated from us and went out on their own last September and that went really well.

I think (the separation from Local Government FCU) is going to go really well, but along with that is $70 million in income that goes away. We loved on their members and built their credit union for so many years, and we’ve still got the human capital expense, so let’s view it as a double-whammy.

Our branches also serve  North Carolina Press Association Federal Credit Union members. 

A Story Not Shared

Naylor: This is a story that really has not been shared in the industry. State Employees, instead of being told no, innovated and created something new.

Under previous management, State Employees said it would not be opening organization or business accounts and our board said no, those are very important for us. That was in 2013.

That’s what we started Civic Federal Credit Union. We built a very advanced technology credit union and State Employees came over and I said, ‘Give me about a year we’ll have a solution.’ It took three years to get a charter but then we were able to build that. 

‘They Gave Us the Time’

State Employees continues to serve our organization accounts, when they had already stopped doing it themselves. So, they could have just said, ‘It’s over, go figure it out.’ They did not; they gave us that time. Launching  Civic about seven years ago allowed us to build the talent and the organizational competency to be ready for this transfer, because State Employees is also going through their own transformation in terms of their core and all that other stuff. Us moving off will help them.

This is a remarkable story. I spent 17 years of my life at SECU (and Leigh Brady) was my counterpart in audit a long time ago. How does all this make business sense for State Employees. They said because it’s cooperatives helping cooperatives and there was an innovation and we cannot merge because of regulation and our board did not want to merge, they wanted to be independent.

Hundreds & Hundreds Involved’

So, what we did is spent the last 25 years building partnerships within local government. This transformation is 100% volunteer-led. The SECU board said we are 100% behind you and the executive team. Hundreds and hundreds of people been working on this for two years and State Employees is a little busy; they’re going through their own transformation.

This is the most remarkable credit union industry story that has never been told. We just really wanted to bring it to light and share the example for all of us.