SECU’s Safety and Soundness Questioned by NCUA
An NCUA Office of Inspector General’s investigative report revealed that the federal regulator questions the safety and soundness of the $25 billion State Employees’ Credit Union, the nation’s second largest.
The document, which cleared Region III Director Herb Yolles of making false statements about North Carolina Credit Union Division Administrator Jerrie Jay, also detailed more than he said-she said exchanges between federal and state regulators after SECU publicly released its state CAMEL rating.
“We have a good track record, and if we’re wrong, we say show us your model, and we can then tell you why we think you’re right or wrong,” he said. “But they don’t have a model. Their answer to our board is ‘we would just sleep better at night.’”
According to March 2012 Call Reports posted on the NCUA’s website, SECU charged off nearly $11 million during the first quarter, $8.1 million of which came from mortgage loans, including $5 million worth of modified first mortgages. While that might sound like a large number, due to SECU’s size, its net charge offs to average loans was only 0.30%. Delinquencies in March were reported to be 1.69% of total loans.
On March 20, Yolles told the investigator he was “50/50 certain that Blaine was reading from the DOR” forwarded by Jay. The investigator told Yolles that an identical document was given to SECU by Nixon, and he then asked Yolles if it was possible Blaine was reading from that document, rather than the one routed through Jay.
“Yolles stated he was still pretty certain Blaine was reading from the draft DOR,” the report stated. “Yolles explained further that based on an inquiry his office conducted, he concluded that no one at NCUA provided the draft DOR to SECU; rather, the only way SECU could have obtained it would have been from someone at the NCCUD.”