Local Government Federal Credit Union to explore independence from State Employees Credit Union

Local Government Federal Credit Union to explore independence from State Employees Credit Union

November 9th, 2022

Credit unions that serve local and state government employees in North Carolina for the last four decades are now looking at creating separate institutions.

In a letter sent Tuesday to members, Local Government Federal Credit Union Executive Vice President Mark R. Caverly said the board of directors of both LGFCU and State Employees’ Credit Union have decided to explore operating independently.

LGFCU is the only statewide credit union exclusively serving North Carolina’s local government employees and volunteers, elected and appointed officials, and their families, and partners with SECU to give members full services at SECU’s branches and ATM network.

A Supreme Court decision in 1979 required SECU to expel local government employees from its membership. SECU then assisted LGFCU in obtaining a federal charter in 1983.

LGFCU assets currently exceed $3 billion with more than 380,000 members representing all of North Carolina’s 100 counties and 540 towns, cities and villages.

“A separation from SECU could mean we would be able to create member-requested products and services specifically for you, our members/owners,” Caverly said. “Should this proposed path be adopted, it would also mean we would no longer rely on SECU to process your transactions.”

Caverly said no changes to LGFCU accounts will happen during the exploration process.

“Believe it or not, becoming operationally independent from SECU was contemplated in LGFCU’s early days. LGFCU is now well-suited to consider this transformative journey toward independence.” Maurice Smith, Chief Executive Officer of LGFCU, said in an October press release.

“We have a very exciting future – serving our members directly through our own delivery channels and offering a suite of products and services targeted to meet the specific needs of our membership,” said Smith.

“Our relationship with SECU has demonstrated the cooperative philosophy in action; SECU has been a tremendous partner in not only encouraging and supporting LGFCU from the beginning, but also recognizing and supporting our new vision,” Smith said.

“While it’s been a privilege to serve LGFCU’s members over the years, we fully support LGFCU’s exploration of this new direction,” said SECU CEO Jim Hayes said.

“These discussions are an acknowledgment of decades of hard work by both organizations to better serve the interests of unique fields of membership,” said Hayes.

“I’m excited that LGFCU has the opportunity to control its own destiny. This decision by LGFCU’s Board will also allow SECU to focus on enhancing our value proposition to our membership,” Hayes said. “Together, we have created major and sustainable impacts on the lives of countless North Carolinians. We will continue to do so, but perhaps in a different business model.”

In Tuesday’s letter, Caverly answered a number of questions about the possible separation:

Why is “independence” being considered?
First and foremost, our LGFCU members are our top priority. While our relationship with SECU has been positive, our continued reliance on SECU would likely limit our ability to offer products and services that are specifically designed for LGFCU members.

SECU and LGFCU have separate fields of membership, and thus different operational goals. We view our exploration with SECU as a natural and mutually beneficial step toward ensuring the best interests of both LGFCU and SECU members, now and into the future.

Operational independence from SECU was first contemplated just after the LGFCU-SECU partnership agreement was signed in 1983. The intention was for both credit unions to work collaboratively to allow local government employees access to their Credit Union.

This long-term credit union partnership is unprecedented but was created with a plan for eventual separation once LGFCU achieved growth goals that would enable us to operate independently.

We want to ensure that the local government community continues to have its own Credit Union, one that is solely dedicated to meeting the unique needs of our public servants. We continue to be inspired by our local government members, and it truly is an honor for us to serve those who serve North Carolina so well.

If this separation is approved, when will it take place?
As part of this exploration, we are working in partnership with SECU to better understand how members might be best served should a separation take place. Teams from LGFCU and SECU are actively working together to explore the processes and steps that would be necessary as part of this.

Since there are also legal and regulatory requirements that would take time to put into action, LGFCU and SECU will remain partners for the foreseeable future.

What’s next?
We want you to engage in the process as we work through exploration, and we know you may have questions. We recognize this exploration process may be unsettling for you. We pledge to keep you informed.

We will never lose sight of the fact that this is your Credit Union, built to serve you and help you reach your financial goals. We’re grateful for your membership and will continue to prioritize your needs as we explore the exciting possibility of operational independence for LGFCU.

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