SECU Study Seeks to Highlight Benefits Being CU Members Brings; CU Saved Members $162 Each in '03

RALEIGH, N.C. – In an effort to help document how its members and community benefit from the existence of the $13 billion State Employees Credit Union the CU has chartered a study by a noted economist to pin down how much money CU members and the community save in lower fees and make on higher savings interest rates. Dr. William Jackson, an economist with the Federal Reserve in Atlanta who last year studied the impact of credit unions on the North Carolina market overall, conducted the study which was not associated with his duties for the Federal Reserve. The report finds that SECU members receive financial benefits primarily through lower rates on loans, higher rates on deposits and lower fees on specific financial products and services. Dr. Jackson estimated that in 2003, lower loan rates directly resulted in at least $48.8 million in savings to SECU members, while higher deposit rates gave members an additional $55.6 million when compared to available rates at other financial institutions. Lower fees, however, created the largest financial savings for SECU members with an estimate of nearly $58 million in checking and first mortgage closing costs alone. In all, SECU members received over $200 million in extra spending power by using the credit union. The total savings and increased earnings equal $200 million per year, Jackson reported. Part of the CU’s impact derived from its size. One in every 10 North Carolina residents, one million people, is a member of SECU, the report found. The biggest source of savings from lower loan rates came from the CU’s used car loans, which provided 62% of the savings and the highest earnings came from deposits made into money market deposit accounts, Jackson found. Lower fees on checking accounts provide the lion’s share of savings from lower fees. Jackson calculated the lower rates on loans by examining five types of loans the CU offers, credit cards, personal secured loans, new car 60-month loans, used car 36-month loans and home equity loans. He compared rates members earned on four deposit products, regular savings, interest checking, money market and certificates of deposit to the average rates those products brought from other financial institutions. In each case, Jackson explained the savings from lower rates on loans and increased earnings from higher rates on deposits should be seen as conservative since he had not included other SECU loans and other SECU investment products in the comparison. When it came to the community at large, Jackson estimated that nonmembers benefit from SECU’s presence in their community in three ways, the existence of surcharge-free ATMs, competitive pressure the CU exerts on the North Carolina financial services market and the existence of the SECU Foundation. SECU maintains and drives over 900 ATMs statewide through its Cashpoint network, a fact that makes SECU only one of five ATM networks which does not charge a surcharge for access by a noncustomer Given that the average ATM fee in the state is $2.00, SECU’s presence in North Carolina saves all North Carolina residents $48 million annually. Jackson cited previous studies from 1998 and 2001 for the impact SECU might have, a 10 basis point reduction on consumer loan rates, for example, for the impact the CU might have had on the overall financial services market. The SECU Foundation is a charitable organization that the credit union established in 2004 and which credit union members finance by a voluntary $1.00 per month contribution from their checking accounts. Jackson reported that over 99% of SECU members with checking accounts contribute and that their annual contributions equal more than $6 million per year. Jackson also reported that the foundation donated a $10,000 college scholarship to every public high school in the state and two $5,000 scholarships at each of North Carolina’s 58 community colleges. Charitable commitments from the CU’s members will exceed more than $60 million over the next decade, Jackson added. Jim Blaine, CEO of SECU, said that the CU chartered the study in the wake of a similar effort the North Carolina Credit Union League had made to document the impact of credit unions generally in the state. Blaine said he thought it was important to document the credit union’s impacts for contributing to several different ongoing policy discussions. “I think it’s important to be able to show legislators the tangible benefits credit union membership has on their constituents,” Blaine noted. “And at a time when some contend that it is only a legal technicality that makes a CU different from a bank, the public at large needs to know how much better they do, both as members and as society at large, with credit unions instead of banks. It’s more than just a slip of the pen we’re talking about here,” Blaine said, referring to the DFCU Financial charter change controversy in which the CEO of the $1.8 billion DFCU Financial has contended that it is merely a legal change when a CU becomes a bank. [email protected]