RALEIGH, N.C.–All three people who ran as challengers in the board elections at State Employees’ Credit Union here have won seats on the board, ousting three incumbent board members.
The three member-nominated candidates—who had to gather signatures in order to be eligible to run in the election--won all open seats by receiving the three highest vote totals of the six candidates. Incumbent directors received 47% and the candidates nominated via petition, 53% of all votes cast.
Michael Clements, Barbara Perkins, and Chuck Stone, each of whom said they were inspired to run out of opposition to changes in lending polices at SECU, will now join the board.
Approximately 13,000 members cast votes both online and in-person in the election, one of the few contested credit union board elections in the country.
Risk-Based Lending at Heart of Dispute
As CUToday.info reported here, the changes at the $50-billion SECU that are at the heart of disagreement over the CU’s lending philosophy involve tier-based, or risk-based pricing, and were the subject of a long report by local media outlet The Assembly. The policy changes were made by then CEO Jim Hayes, who came to SECU from outside the organization and succeeded the well-known and outspoken Jim Blaine (who led SECU from 1979 to 2016) and then Mike Lord, who maintained Blaine’s philosophical approach when he led the organization. Hayes has since departed to become CEO of State Department FCU.
Blaine has voiced his strong opposition to the change.
“SECU had long offered all 2.7 million of its members the same rate on loans, a policy that is extremely rare in the financial services industry,” the Assembly reported.
The current board and CEO Leigh Brady said the change was necessary in a fiercely competitive environment, but some former employees and longtime members said the decision was an abandonment of SECU’s core principles and unnecessary given its financial strength.
Surprised by Vote
Both current CEO Leigh Brady and Blaine told the Assembly they were surprised by the vote.
“I thought it was an impossible task” to elect candidates the current board had not nominated, Blaine told the publication.
Brady said the vote totals indicated that most members weren’t all that interested in weighing in on SECU’s policies, according to the Assembly.
As the Assembly had previously reported, SECU said rising delinquencies and very low-yielding investments it made during the COVID pandemic made continuing its policy of giving all members the same rate “very difficult.”
The Assembly noted it’s not clear SECU’s board election will lead to the “dramatic policy reversals” the challengers sought. Brady said in a speech just before the votes were tabulated that SECU planned to expand its pricing strategy to all types of consumer loans in the coming year, according to the report.
“The dynamics of the board will change, for sure,” said Brady after the vote. “But I think that in the end, everybody wants what’s best for this organization.”
But the Assembly noted at least one new board member said she plans to make ending tier-based lending her top priority. “I think we can be successful if the board is open to the message members sent with this vote,” Perkins told the news outlet.
What Members Said
Among some of the quotes made by members at the annual meeting cited by Chip Filson on his blog at ChipFilson.com are:
- A retired 47 year SECU employee: “I’m scared to death with what I see at the credit union. . .Risk based lending and card rewards are paid by those who overpay interest. Open your eyes.”
- Member since ’75. “I got a loan as a college grad with no credit score. . . against RBL. . . I’ve attained financial security. We should be a community where we help each other.”
- “I’m amazed after 85 years that we cannot exist without treating members equally. RBL is race-based lending.”
- “Why is the credit card rate increasing? If a member wants rewards, go to a bank. If the board wants rewards, they should go to a bank.”
- “Transparency is lacking, especially the bylaw changes. We have been denied democracy.”
- “I’ve no prepared comments, Just hope the board will see that the people here do not support the mindset of this board.”
- Retired 41 year senior employee: “The employees need a service heart for the membership. The last two years have not been for the benefit of the member. What I’ve seen breaks my heart.”
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