Banks aren?t the only option for local residents.
Baltimore-based State Employees Credit Union of Maryland Inc. (SECU) provides a different way for consumers to handle and operate their finances. Operating without shareholders, SECU reinvests most of its profits back into its members through lower interest rates on loans or higher-percent yields on savings than a typical bank.
“We don?t target a certain demographic by age or location, but [we want to reach] everyday people,” said Rod Staatz, chief executive officer of SECU. “That?s what credit unions were founded for.”
The mortgage market is an area that SECU, as a credit union, differs from many financial institutions. While many traditional lenders sell off the equity that is associated with a loan?s debt, credit unions simply loan out the money that is deposited with them in savings and CDs. By taking a less risky approach to the loan market, and not falling into the trap of offering what Staatz called “exotic” loans, SECU has given itself a solid future.
So far in 2007, more than 50lenders have filed for bankruptcy, with one of the biggest and most recent being American Home Mortgage Investment Corp. Lending out nearly $60 billion in home loans in 2006, the company indicated to The Associated Press that nearly none of these loans was of the subprime variety.
Planning ahead remains a key to success and avoiding these problems, Staatz said.
“When we took a look at something like variable-rate loans, we try to plan what would happen if rates were to rise, he said”
The majority of the 247,000 members of SECU are either employees or former employees of the state of Maryland, students or alumni of a University of Maryland system school, or employees of a company that has a relationship with the credit union.
One of the large drawbacks of a credit union is its small size and lack of branches ? SECU has 15 branch locations and in 2006 was ranked 49th in the U.S. in total assets with $1.6 billion.
“There?s a lot of ways to get there,” Staatz said of SECU?s future vision. “But at the end of the day, our goal isn?t to rule the financial world, it?s to help the people in Maryland.”
