Thursday, October 13, 2022

SECU Risk=based Lending #1

 To: the SECU Board of Directors

2684 Glen Forest Drive
Winston-Salem, North Carolina, 27103-6507
336 529-7330
336 893-5164 (FAX)
October 13, 2022

Dear Chairman Ayers,
I have been a proud member of the State Employees Credit Union for well over 45 years.
I have served
on our local advisory board. I was one of the original members of the loan review committee and served
for its entire tenure. I had been honored to serve for six years on the SECU Foundation and I am again on
our local advisory committee. I am very concerned with what I heard at the close of Tuesday’s annual
meeting. Several issues were identified, which apparently are under discussion, and which I, and other
members at my table, were totally unaware. Our general consensus was “Wait! we are the State
Employees Credit Union”. Some of these issues seem to be so totally contrary to our culture
and philosophy that we were all in somewhat a state of shock.
I have been a strong advocate for our credit union. The reason is because in all of the meetings I’ve
attended on the SECU boards and committees, we have always highlighted the impact on our members.
Our first question and consideration has been “How does this affect our members?” Indeed, the fact
that for these many years we even had something called a “Loan Review Committee” demonstrated our
concerns that we were doing the right thing by our members and allowing other members to review the
decisions made by our loan officers and given them the authority to actually override those decisions.
Though this never happened in our committee, we made suggestions on behalf of the member that may
have given them the opportunity to obtain a loan. This was just one of the many practices of our SECU
proving our commitment to doing the right thing. It concerns me that a decision was made to disband
the LRC. With the LRC, every member had the opportunity to have their fellow members weigh in on
their application. To my knowledge, no financial institution in our state, provides this option. This was
another of the reasons why the SECU is better and more successful that other financial institutions.

It appears from Tuesday’s revelation that some of the items up for discussion are an attempt for us to
either increase our market share or to compete with commercial banks. One of our points of pride has
been that we are not like commercial banks; we are unique which puts us in a category unto itself. That
is why we have been identified by Forbes, for many years, as the best credit union in the state of North
Carolina, and why we are the second largest credit union in the United States of America! We have
always put our members first, and all members were equal. I will admit of those six issues that were
placed for consideration, the one which was most egregious to me was the introduction of Risk-Based
Lending. This policy clearly signifies that all our members are NOT equal, and that those members who
have the lowest credit scores and the weakest backgrounds will actually be charged more for their
loans! I u
nderstand that the practice of Risk-Based Lending was approved by the board earlier this year
but has yet to be implemented. In my opinion, this is NOT a good practice and I am appalled by this
decision. I feel strongly that a majority of our members would feel the same way IF we had been
informed prior to the decision! Wait...we are the State Employees Credit Union we are not like other
financial institution...we are better.
Also, attempts to acquire other credit unions and to have an open
membership policy would be viewed as competing with commercial banks.

During Tuesday’s meeting, we felt a strong sense of pride hearing the various reports of the soundness
and strength of our organization. Hearing about our growth over these 85 years our only response
was...WOW! So why are we even considering these changes?
As one member who has been a proud cheerleader for our State Employees Credit Union, I am
concerned that what makes us a clearly incredible organization could be lost in our effort to be....what?
Please discuss carefully any changes to our policies that could either negatively impact any group of our
members or would affect our strong standing in the financial community. Please reconsider some of the
decisions that the Board has made or is considering, and though we know the Board has the authority to
make to these decisions, possibly share the more significant changes with the members. We are the
State Employees Credit Union and we have always put our members first. Thank you.
Michael L. Clements
Michael L. Clements
Former member of the Local Advisory Board (late 1980’s)
Former Member of the SECU Board Search Committee
Former Member of the SECU Foundation
Former Member of the Loan Review Committee
Member of the SECU Stratford Road Advisory Committee