KPMG study finds SECU deposits stable through all rate cycles

RALEIGH, NC (November 4, 2014) — With the heightened regulatory focus on capital planning and stress testing, the $29 billion State Employees’ Credit Union (SECU) has asked KPMG, a global accounting and consulting firm, to assess the strength and stability of its deposit funding structure.  KPMG’s independent SECU deposit study report, released October 20, 2014, found SECU deposits to be long-lived and a stable, reliable source of funding for the Credit Union.

Understanding and anticipating deposit account behavior is a valuable planning tool, typically reviewed by financial institutions under a variety of economic and interest rate environments.  Similarly, KPMG’s Study evaluated SECU deposits in the categories of rate-reaction (sensitivity of SECU rate offerings to market interest rates), maturity (how long, on average, deposits stay on the Credit Union’s balance sheet), and growth and decay (the degree that depositors increase or decrease the balance of their accounts at SECU as market rates change).  KPMG’s Study utilized 12 years of SECU data (from 2002 to 2014) to assess stability in deposits at the Credit Union.

SECU member-owners recognize the safety and soundness of their Credit Union and consistently bring deposits to the organization in response not only to the financial safety of the organization, but to the favorable interest rate offerings.  Deposit balances at State Employees’ Credit Union, in turn, have shown a history of growth through many economic environments, favorable and recessionary.

KPMG reported that “SECU manages rates on its deposits and does not tie the rates to an index.  Generally, SECU deposit rates are only moderately sensitive to the changes in market interest rates.”  SECU deposits are very stable and not prone to significant decline through all rate cycles and “with average lives that range from 4.2 years to 22.2 years over the entire time frame.  “The money market share account [which is the savings account most used by SECU members] has an average life span of 14.4 years to 17.8 years.  The long deposit lives reflect that deposits are a reliable and very stable source of funding for SECU.”

Chief Financial Officer Mike Lord remarks, “Our members, recognizing the value of their cooperative, have exhibited their commitment to SECU throughout the years by consistently bringing their deposits to the Credit Union.  Deposit balances are “long-lived” and not subject to significant changes when market interest rates experience fluctuations, similar to rate movements over the past 12 years which included periods of falling, rising and flat interest rates, as well as recessions, periods of economic growth and decline.  KPMG utilized a number of statistical techniques to evaluate member deposit sensitivity and found that, SECU deposit rates are only moderately sensitive to the changes in market interest rates.  We are pleased that KPMG’s results parallel the findings of our internal studies.”

About SECU
A not-for-profit financial cooperative owned by its members, SECU has been providing employees of the State of North Carolina and their families with consumer financial services for 77 years.  With more than 1.9 million members, SECU provides services through 254 branch offices, 1,100 ATMs, 24/7 Contact Centers and a website,

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