Traveling the Rural Road
CEO devotes career to the financial needs of small-town North Carolina.
Small towns, farming communities, and the people who live in them are
Maurice Smith’s top professional priority and his personal vocation. As president/CEO of Local Government Federal Credit Union, Raleigh, N.C., he serves the state’s local government unit employees, elected officials, appointed officials, and their family members.
“I’m really drawn to small towns,” he says. “The people are the greatest. Each town has its own story and its own unique characters. I like to take the rural road when traveling through the state.
“You can make an analogy to small credit unions,” he adds. “In the credit union business, sometimes there’s a feeling that bigger is better. But if bigger was always better, we’d have no small towns.”
Much of North Carolina is rural. Often local banks aren’t interested in making small loans to the inhabitants. And that reluctance extends to small loans for critically needed equipment, such as fire trucks, he says.
While the credit union serves the employees of local government units, it formed a CUSO, LGFCU Financial Partners, in 2006, to meet the needs of the state’s local municipalities.
“In North Carolina, local government units can only deposit funds in banks, savings and loans, and trust companies because of state investment laws for units,” explains Smith. “The CUSO was a perfect match for us. It made sense for us to provide services to the towns. They came to us.”
LGFCU Financial Partners is a wholly owned subsidiary with separate governance from the credit union’s board, to provide limited liability. About 76% of its lending is to fire departments, 22% to emergency medical services, and 2% to city/county units.
In the four years since it launched, 139 borrowers from 53 counties have borrowed approximately $38 million. The CUSO has had no losses.
The credit union’s service to small communities actually began with a lawsuit. In the late ’70s, a group of bankers sued the North Carolina state credit union regulator for allowing State Employees’ Credit Union in Raleigh to include local government units in its field of membership. The case went to the courts, and eventually the regulator lost. The courts ordered State Employees’ to divest itself of the local and county government employees.
The regulator responded by chartering a new credit union, Local Government Federal, in 1983. From that point on, the two credit unions have had a unique symbiotic partnership. Local Government Federal has no branches. Its members transact financial business at State Employees’ branches and ATMs. Local Government Federal pays State Employees’ a monthly fee for the shared branching, shared ATMs, and back-office support.
“Our membership is distinctly different from state government employees,” says Smith. “It shows a great deal of goodwill for them to continue this unique relationship.”
While many credit unions across the U.S. include local government unit employees in their fields of membership, to Smith’s knowledge his credit union is the only one in the country to serve such employees for an entire state. This creates cohesiveness among the membership, he says.
Smith’s dedication to these members is what led Erica Hinton, the credit union’s communications officer, to nominate him as a CU Hero. “Maurice constantly makes himself available to members directly,” she says. “Members can call and speak with him anytime, and if they send him an e-mail, he makes every effort to respond that day.”
He also regularly attends the credit union’s seminars. When Local Government Federal held its first youth conference about a year ago for its youth advisory council, says Hinton, Smith made a point to be there. “It was on a Saturday, and of course Maurice was there to interact with the youth. As an employee, I can say that I’ve never worked for a president who was so approachable and willing to take time out to work with members and staff.”
The youth advisory council, with 16 members, is an offshoot of the credit union’s volunteer advisory council. Together, the two groups include nearly 500 volunteers who act as focus groups, political foot soldiers, and marketing ambassadors, says Smith.
“They’re our secret weapon—everyday members who volunteer to serve the credit union,” he says. Advisory council members come from all walks of life, including managers, elected officials, human resources professionals, utility workers, stay-at-home parents, and students.
Smith’s goal is to double the advisory council numbers within the next few years. “The more we get diverse feedback, the better we’re able to serve our membership,” he says.
Local Government Federal designed several recent programs specifically to assist members during tough financial times. Among them are the credit union’s:
- Unemployment Protection program, which allows unemployed members to withdraw principle and interest on credit union certificates before maturity without penalty. “This gives members an out when they really need it,” says Smith.
- Subprime direct mailing effort, designed to identify members who fit the characteristics of consumers with subprime loans (exploding rates, balloon payments, option adjustable-rate mortgages, and other factors). “We mail these members information about how to get out of bad debt, and urge them to visit the credit union for help,” he says.
- Mortgage loan modifications, which require a one-on-one conversation between a loan officer and the member who’s experiencing financial stress. Depending on the individual situation, the credit union will allow loan term extensions, payment reductions, consolidations, financial counseling, and other adjustments that “make sense,” says Smith, for example, when the cause of the delinquency is temporary, the member shows good character, and the collateral is sound.
These programs have helped control loan delinquencies, says Smith. “It’s a proactive approach, but it’s also just the right thing to do. It’s a blend of practicality and compassion for people who are going through tough times.”
Smith can’t think of anything else he’d rather do for a career. And apparently the dye was cast early.
“In my high-school yearbook I was voted ‘most likely to become a bank president,’” he says. “I made out better: I became a CU president.”
Smith has devoted his entire career to credit unions, starting in 1979, “fresh out” of the University of North Carolina Wilmington, where he graduated with a B.S. in business administration. He came to Local Government Federal in 1992 and became president in 1999. During his tenure, the credit union has grown from 63,150 to 192,109 members, and from $217 million to $1.1 billion in assets.
Smith attributes the growth to several factors, including exceptional employees, convenient State Employees’ branches, effective branding efforts, a focused field of membership, competitive pricing, and relationship-building.
Smith is a natural at the latter, because he has deep roots in the state. He grew up in rural North Carolina and describes himself as an “old country boy.” In addition to the diversity of the state’s geography—from coastal towns to mountain villages and several large cities—North Carolina also boasts a diverse population.
“North Carolina is the best place in the world to live,” says Smith. “It’s a privilege to serve our members here.”
A COUNTRY LAWYER AT HEART
After nearly three decades of working in credit unions, Maurice Smith got a law degree. The president/CEO of Local Government Federal Credit Union, Raleigh, N.C., graduated from the North Carolina Central University School of Law, Durham,in 2005.
“It’s not something I did to change careers, but as a need and an opportunity to make my service here at the credit union better,” he explains.
Smith uses the words “fun,” “reinventing myself,” and “more motivated” to describe his foray into law. He takes continuing education courses—in finance law, politics, business, and other subjects—every year to keep his license.While he might leave credit union management at some point down the road, he envisions a second act in rural North Carolina—settling in a small community with his wife of 30 years. “I don’t know that I’ll ever retire,” says Smith. “I see myself as a country lawyer some day.”