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- While summer break and holiday plans, maybe couldn't come at a better time, given all of the geopolitical issues and uncertainty around an anxious economy, heading to the beach or the mountains or family vacation certainly seems like a perfect sale for sure.

Welcome again to the most widely watched and longest running program on Carolina Business Policy and Public Affairs.

I am Chris William and thank you for supporting this dialogue for more than 30 years, seen each week across the Carolinas.

This week, we will unpack some of the biggest issues facing our community.

And we will start with our guest panel in a moment.

And later on the chief executive officer of one of the nation's largest credit unions, and we start right now.

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(upbeat music) On this edition of Carolina Business Review, James McQuilla from the Orangeburg County Chamber of Commerce, Scott Hamilton of the Golden Leaf Foundation and special guest, Jim Hayes, President and CEO of the State Employee's Credit Union.

(upbeat music) - Well, happy weekend.

Gentlemen, this is kind of a landmark moment.

Welcome back to the studio.

This is kind of cool.

- Thank you.

- This is... - Feels good.

- Get together again.

- Nobody's anxious or nervous about anything.

- You feel the excitement in the building.

- Yeah.

- Well you both look taller and more handsome than I remember from the- - No.

- I mean, everybody says that.

Welcome, I'm being a little bit flippant.

But James let's start with you.

So as we kinda heading into a summer?

We get some momentum going there still is kind of this bugaboo about an economy and is there anxiousness?

Do you feel like there's a recession around a corner?

What does it look like?

- Well I think there is a recession around the corner, but the fact that it's been two years for folks to actually get out and do something, we're seeing people take advantage of opportunities.

Just recently, we had a large festival; The Roses.

A festival in Orangeburg, South Carolina, and it was attended in droves and people were spending money and having fun families and all of that.

But I think that's gotta be tempered by the fact that interest rates are up, gas prices are still moving up and they're probably gonna continue to go up.

And so we're gonna have to see whether or not the general public is gonna be willing to do some of the things that it wants to do or they're just gonna have to continue to do what we have to do.

- Scott is there just feeling of whistling past the graveyard when we talk about the economy but we look at our summer plans?

- I think James's point of recession is around the corner is a good one.

I think there's gonna be a slow down but I also think people are gonna adjust to it.

And so instead of driving further, maybe going further away, they're gonna look more, what can they do in day trips?

What can they do nearby?

As everybody is excited about being in the studio today, - Right?

- Yeah.

- Everybody is excited about getting out and as the weather's good, you go by restaurants that have outdoor patio seating, craft, beverage manufacturers, and the breweries and the wineries and all, you see lots and lots of people.

They have missed and they crave that social interaction.

- So, this, I'm sorry.

Go ahead.

- Well, I was just gonna say, so I think on the personal expenditure side, is gonna shift some, business side, I think in a sense if it affects and helps the supply chain move forward because people aren't buying as much.

I think that could be a good thing as well.

- Do you think the supply chain is still an issue?

- I think it's still an issue and we see that in hospitality with some of the restaurants, you see it in the construction industry, there's still a slow down in getting materials so that's still an issue.

- So the idea is you talked about Scott, that we are out spending money on vacations.

This is now the second summer of that kind of that release of a pent up demand.

And I'm looking at you but James question for you as well, how much more of this kind of, you could call it record spending activity, do we have in us?

This summer next summer?

Are we gonna make it through this summer?

Or are we gonna run outta steam?

- Again Emma have to give my personal answer.

I think there's gonna be quite a bit of spending this summer, but we're probably gonna run outta steam.

There's not gonna be, I don't expect the federal government rescue money anymore.

You're gonna spend some money.

I think Scott was right.

A lot of it will be spent locally.

So you may not see the trips going out of the country, but it will be spent in the country but next year, you're probably going to see a lot a shift back to normal.

- Yeah.

- Okay.

What about- go ahead, Scott.

- Well, I was just gonna say there's more money and people have more money in the banks cause they haven't gone places and they got out some last summer but still it was kind of muted.

I mean, there were mass and people were not as comfortable.

There's a whole different sense, I think this summer, but I think the challenge will be, as interest rates start going up, gas prices start going up as James talked about.

That cash in the banks gonna start to shrink and people are gonna start paying attention to what they can and can't be doing.

And so I do think that there will be an impact but I think they still currently are craving that sense of community.

- Yeah.

Because prices are higher.

Even though, as you mentioned, we may have the cash it'll dwindle quicker.

We're having to pay more for things.

- When Golden Leaf makes a grant, when Golden Leaf commits to a project, does the use of the funds change now than it even did two years ago, based on the new reality?

- So when we fund a project, we're gonna look at what are the outcomes.

Our board looks at a couple of different things.

At the end of the day, the outcomes are a clear path to job creation, is the project sustainable after the Golden Leaf dollars have been deployed?

And how does that project move the economic needle?

And so as they look at those questions with projects that we fund, it's not gonna change those dramatically.

North Carolina has had a great opportunity with a number of large announcements and- - Economic development.

- Yeah.

And economic development announcements.

Yes, sir.

And so looking at how our programs fund, workforce, infrastructure, I don't think that what we funded two years ago to what we're funding today or even in the next year is gonna change that much because of how we fund and what we fund in economic growth and opportunity.

- South Carolina policy is pretty much set now that this general assembly is finished their session.

- Yes.

- What are you most encouraged about that they did this year?

Is it tax reform?

Is it something else that was unexpected?

- Well, I think for me, it was really more along the lines of some of the social ideas that came about, it wasn't really tax reform, but the fact that they wanted to look at putting money into charter schools and public funds and into the private schools also because we need to really take a serious look at the best way to educate the young people in our state and all those are options that in the past, we may not have, particularly had any interest in, but this legislature did take a look at funding some schools a different way and funding different schools a different way.

A lot of people still may not like that but I think they don't like the outcomes that we're seeing right now more.

- Is that because superintendent Spearman's been banging the drum so long or was there just this pen up demand to do something about education?

- I think it's a little of both.

Superintendent experiment definitely saw the need.

There was also a need to pay teachers more.

- Yeah.

- And that took place but families need options.

Parents need options and they gave us options this year.

- Scott, same thing for North Carolina the session's not over?

Well, one session is, but they're still making policy.

Do you feel like education's gonna be the biggest winner?

- I think in the short sessions, they really come in and look at how the budget worked from long session as they get ready to start into the new fiscal year.

I do think with some of the federal money that is out there, there's gonna be a lot of broad funding opportunities for the general summit to look at specifically towards education.

I'm not sure how they would move forward in the short session, but they are gonna have some good decisions before them revenues in North Carolina are currently up.

There's still some federal dollars that need to be assigned and deployed out to the communities.

And I think that's where some of the focus will be.

- We're gonna have to draw the line there.

Gentlemen, thank you.

Stay with us please.

Coming up on this program, early July certainly in the summer months, we will have a two part program on not just the South Carolina Port, but there's a change in leadership going on there.

Jim Newsom's been the longtime CEO, Barbara Melvin is following him in, but we will have not just the former CEO, new CEO, but we'll have Harry Lightsey, who is the secretary of economic development in South Carolina.

And also secretary of transportation in South Carolina member of the governor's cabinet, Christie Hall will also join us.

All of that coming early July.

We want you to watch for that.

Our guest though right now, leads the second largest credit union in the US.

This 85 year old institution has over 50 billion in assets serving a little bit more than 2.6 million North Carolina employees and affiliated state workers.

This organization acts more like a community bank than it does a large corporate financial institution.

Joining us now, is the President and The Chief Executive Officer of The State Employees Credit Union, Jim Hayes.

Jim, welcome to the program.

- Thank you.

Thank you.

- That idea that you are more of a community bank than you are a large financial institution, your predecessor, Jim Blaine sat right there.

- Yes.

And said that with a lot of pride.

So I'm assuming you feel the same way.

- Oh.

Absolutely.

And I think you're gonna get that from a lot of credit unions, but for sure we have that home hometown feel and we will continue to serve our members in a very personal manner.

And so that kind of gives us that hometown sort of feel and look for our members.

And so we don't wanna lose that.

That is definitely part of our identity.

- Jim, let me ask you to be a formalized banker right now and economists are talking about, that right now the ayes have it and the ayes meaning inflation and interest rates.

- Right.

- How is that changing the near term of your constituents, your folks?

- Well, I would agree with what I've been listening to.

So far prices are up, inflation's up, it affects everybody.

You can't go to the grocery store.

You can't fill up your car with gas without noticing how inflation is affecting everybody.

And at the same time loan rates are up.

And we can't deny that.

So as rates go up, of course that puts a little pinch on consumers because if you're in a fixed rate loan, you're feeling good.

If you're in an adjustable rate loan and a lot of credit card debt is in adjustable rate loan.

So they're gonna start to feel some of that increase in loans.

So it's gonna start taking a little bit more money outta consumer's pockets.

And so we gotta be careful with that.

- Will it, and one more follow up and I promise, let y'all jump in here.

It's gotta be good for the bank.

It's gotta be good for you all, it expands your interest.

- It does.

It does.

It's good for our margins.

I mean, we have a lot of cash sitting in the Federal Reserve for example.

And so as the Fed Funds go up, we are earning more on those.

So for sure, it's gonna help us in the short term.

Long term rates, as mortgage rates go up and mortgage rates are today over 5% for the 30-year fixed which has not been the case in many, many years, we'll start to affect things like home prices and home demand and the ability for borrowers to buy.

In particular those first time home buyers.

And those that's an important group of people that we wanna make sure we pay attention to is can we get first time home buyers into a home?

And as rates start to creep up, if long term rates, if mortgages are going to 6% or 7%, it's gonna be very difficult to get those folks into home.

So we gotta be careful with that.

And we are seeing more demand in our adjustable rate loans today because the 30-year fixed rates going up.

- What's the current rate on the adjustable rate roughly?

- You're probably in three to four somewhere around there.

- So competitive.

- It depends if you're going to a five-year, 10-year, 15-year, but it's pretty competitive.

- Yeah.

- So we have seen a shift in demand away from 30 year fixed and to adjustable mortgages.

So we've noticed that right away.

- James.

- Yeah.

- I'm always promoting the interest of small business owners and we've seen so many people look at that as an opportunity and not just an option now.

So banks have traditionally done the small business lending.

What do you see on the horizon for credit unions like yours?

- Sure.

Well, State Employees Credit Union as an entity itself did not do business lending, but we are gonna be doing business lending down the road.

So we will be introducing that loan product probably in the next year.

And hopefully we can do a lot of good with that credit unions as a whole though, definitely do business lending and small business lendings.

And I would encourage anybody, a small business owner to reach out to a local credit union because credit unions want to be connected to their local communities.

- Yes.

- They absolutely want to be local.

And so to get a small business that can support the local community 100%, you will see a positive reaction outta credit unions.

For us again, we have a branch in all 100 counties of North Carolina.

So when we do introduce business lending, we will be doing interest lending business lending throughout the state.

- Do you think it will automatically give some options to current members who might be business owners?

- Yeah.

So for sure.

And it's interesting, you talked about our state employees.

We actually have found that over the past 20, 30 years, a large part of our growth and members are actually not state employees themselves, but it's their family members.

And those family members do have small businesses and they are in the local communities.

And so we see a great demand with our membership as well.

So I would expect within a year or so State Employees Credit will be doing business lending throughout the state of North Carolina.

- Scott.

- How does State Employees Credit Union in particular, but credit unions in general, especially across North Carolina, South Carolina and the rural communities, help them really adjust to these new economic conditions?

Interest rates up, inflation up.

How can the credit unions help rural communities?

- Well, I think speaking for us, I mean, we're in all the counties in North Carolina.

So we work a lot in rural communities.

And so we have two couple things.

I mean number one, we're very favorable on our rates.

I mean, we're still gonna be as good as we can be in terms of competitive rates, you're gonna have a local presence with a lot of credit unions in those rural communities, 'cause we're not the only ones out there.

The credit unions do spread throughout the rural areas and they wanna work with the rural communities.

They wanna work with the local chambers and they wanna work with the local community events and provide some of that.

Now we also have the state employees, our SECU foundation, which we work throughout the state of North Carolina.

And I think Golden Leaf has worked with us and we've done a couple of things together and we will continue to push that.

That's one of the things we're so proud of at State Employees Credit Union is for a dollar a month on a checking account, we fund that entire foundation and we're giving away close to 18 million a year throughout the state of North Carolina.

A lot of which is in rural communities to help them out.

So whether it's scholarships or help funding a project or something, we we're working with that.

And I think, again, I wanna speak highly of all the credit unions in the state because we're all trying to do similar things.

We are larger and do a lot, we have a greater reach, but even local credit unions that are much smaller than us are gonna have the same mission and the same task of wanting to work with that local community.

- Jim How do you keep the brand of the State Employee Credit Union that it's, these are my words, but safe place, - Yeah.

- Inexpensive, you're all part of the members and the families, but how do you remain competitive with other financial institutions?

We use cyber cryptocurrency, - Right.

- How do you feel about that type of either shadow banking with PayPal or Zelle or any of these other things and then cryptocurrency, how do you (indistinct)?

- Well in many ways, we can't ignore that those things exist and we have to figure out how to coexist with them.

So as we develop our digital platforms and we will be developing our digital platforms further, we may offer a Zelle tool through our mobile app.

And many credit unions do that.

- [Chris] Right.

- I mean, there's a lot of credit unions that will use a P to P like Zelle.

- [Chris] Yeah.

And then if Zelle itself is working with crypto, then that's available to a member, a credit union member.

I don't know of a lot of credit union CEOs that want to put crypto on their balance sheet.

It's still very volatile and nobody's really wanting to jump on and put a big pot of crypto currency on our balance sheet.

But if we can facilitate the payments of it and we can facilitate the digital payments and in that we will do so.

And so I think there's a lot of work being done in those areas today.

So it's about coexisting with them.

We can't ignore that they're out there.

We have to figure out how to work with them.

Cause our members are just like every other consumer in the United States.

They're interested in that.

And we do know at our credit union, a lot of our members do deal in cryptocurrency.

We actually can see it flowing in and out of our payments channels.

So we don't wanna just ignore it and act like it's not there.

- Hmm.

James.

- Yeah.

I want to touch on the idea of community outreach again.

Can you share some specific things?

You mentioned the scholarships that you offer, what are some ways that you think each branch could be involved in their community?

- Oh sure.

Wow.

So that's a great question.

I mean, we really do, with 275 branches throughout the state, I have an expectation that all of our branch managers spend a certain amount of time out of the office and in the community.

So I want them involved in junior leagues and rotors and chambers, any of the community.

- Especially chambers, right?

- Absolutely.

- Especially chambers.

- It's too patronizing by the way.

(all laughs) - But absolutely because we're very like-minded and we wanna support you all and want you to support us because we support business throughout the state.

I mean, we want there to be a healthy amount of business throughout the state, the state and all of our communities and a healthy economy throughout all hundred counties of at least North Carolina is something we're certainly motivated to promote.

- But education and a talented workforce is really the foundational factors of communities.

What else does the the credit union do to help rural communities in particular, but all communities really be economically prosperous and through education?

- Well, I mean, we do offer our scholarship program and we do a lot of scholarships every year.

And Chris I'd love for you to have the SECU foundation on the... Well cause really the foundation has been working and by the way this was all part of Jim Blaine's brainchild.

I mean, it was a brilliant way to set this up and the foundation has done so much great work promoting education, housing, lots of projects throughout the state.

I mean, some of them for people who just have need.

And so I don't want to sort name, certain ones, but on our website, we can look at that, but I'd love to promote more of what the foundation's doing.

And even what we're doing with organizations like yours because we don't do it by ourselves.

We do prefer to partner with local communities who are already working on a project and we can kind of come alongside and give them seed grants and help them to get started and get more involvement.

Get more, because it takes a village.

It really does.

And so it's more than just us and it's more than just you all.

We want to get the community engaged.

And so when we can partner with any of the local projects, whether it's housing or education and those are two pretty big ones for us through the state, we want be able to do that.

- We've got about two and a half minutes, so Jim I want to, you hired recently, chief cultural officer.

- [Jim] Yep.

- Is that to answer diversity equity inclusion, or is it something broader and what is it doing?

- That's a great question, it's it yes.

And yes, it's both to be a part of our DEI efforts, but it's not just our DEI efforts.

The culture is a very important aspect for me.

I mean.

- In the communities or within the bank?

- Well, within the credit union, now it may impact the communities because we're so spread throughout the state.

But no, we want to have our culture officer, Emma Hayes, is her name.

She's gonna be developing leadership programs for our employees.

We really want to prepare our up and coming leaders throughout the organization to become more broadly thinking, well rounded leaders and to be quite honest, leaders in their communities as well.

And so DEI is just one vertical, amongst many verticals which is gonna be in her responsibility.

And so she's been on board for a month or so and just kind of getting her feet wet.

But when we can create a leadership program that impacts leaders, our leaders throughout the entire 100 counties of North Carolina, I think it will impact communities as well.

Because as our leaders become more confident as leaders and more sort of broadly thinking and thinking outside the four walls of our credit union, they will start to positively impact their communities.

And so it's a chief culture officer that it's DEIs.

And, and I asked her this question a lot.

It's just one sliver of the responsibility.

It's really more about leadership development and really developing our staff.

- We have a minute left.

You wanna do a quick follow up.

- Well with what you were just saying, and the fact that you have 275 branches, 100 counties, what's workforce looking like for you all?

- Well, we have 7,100 employees throughout the state, and so we will continue.

And we can support rural counties that way.

I think in some of those rural counties, we're probably the most prolific employer in that county in some cases and we will continue to do that.

But our workforce is doing great.

Through the pandemic, a lot of credit unions and financial institutions have the great resignation.

I don't know if you discussed that.

- [Chris] Right.

I mean our turnover rate was never been more than 10 or 11%, which is probably not bad.

- No.

And I certainly know that there are some of our peers that are much, much higher than that.

So I think morale is high and everybody's feeling pretty good about where we're going and what we're doing.

- Especially the new leader?

- You think?

- Yeah.

- Yeah.

- Oh, I feel great.

- You mean that new leader?

(all laughs) - Yeah.

Oh yeah.

- Jim, well, thanks for being on the program.

- Thank you.

- Clearly, they picked a good guy that was kind of in the spirit of Jim Blaine.

And I say that with all of respect and deference.

So thank you for being on the program.

- Thank you so much.

- Yeah.

Nice to see ya.

Nice to have you back.

I'm sorry.

We had a couple of false starts gentlemen, where you had to be flexible enough for us to reschedule.

- It's all right.

Welcome back to the studio for us all.

It's been a great restart, but thanks to you both for traveling.

- Thanks for the opportunity.

Good to see... - Thank you for having me.

- Okay.

Thank you for watching our program.

If you do have any questions or comments, Carolinabusinessreview.org.

I know it's long but it'd be worth it.

Past programs and you can make comments as well.

Until next week, we hope that your summer starts out all right and you have a good and safe weekend.

Goodnight.

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