Civic Federal Credit Union loss widens, membership falls

The financial performance and membership of Civic Federal Credit Union veered in the wrong direction last year after it emerged as an independent financial institution.

Raleigh-based Civic posted a net loss of $123.7 million in the 12 months ended Dec. 31, widening from a loss of $75 million in the first nine months of the year, according to recent federal regulatory filings. Its assets declined to $3.3 billion from $4 billion at the end of 2024 while membership sank 12.8%, or 52,345, to 355,581.

The faltering results defied the expectations of Civic’s leadership as they prepared for the early June merger of the institution with Local Government Federal Credit Union, also based in Raleigh. Civic’s membership declines followed service glitches early in the combination, resulting in about 500,000 calls related to various account issues that overwhelmed its customer-service hotline.

Dwayne Naylor retired last month as Civic CEO, concluding a 40-year career working for N.C. and Virginia credit unions. He championed the merger to create a credit union less reliant on branches and more focused on digital transactions, aiming to compete with online-oriented enterprises such as Ally Financial and Sofi Financial.

CFO Dave D’Annunzio, who succeeded Naylor last month, wasn’t available for an interview Tuesday.

The institution said in a statement earlier today it’s “moving in the right direction —and results will continue to improve in the weeks and months ahead. Since becoming an independent Credit Union last June, Civic has made steady progress while remaining focused on our member-first approach. Civic’s leadership, including the Board, is aligned and fully engaged in taking the necessary steps to keep Civic on its successful path forward.’’

As part of the merger creating the independent Civic, Local Government cut its formal affiliation with the nation’s second-biggest credit union, Raleigh-based organization, State Employees’ Credit Union. A $58 billion institution, SECU provided back-office support and other services, in return for an annual fee that totaled $63 million in 2024. Under the arrangement, Local Government members could use SECU offices for some banking services.

Starting several years ago, Naylor and other Local Government leaders concluded that cutting its ties to SECU would benefit the smaller credit union, even if it ended members’ free access to the bigger organization’s branches.

Local Government opened Civic in 2018 as an affiliated, online operation that makes small business loans, unlike SECU or Local Government. It added 11 branches in recent years after getting feedback from members.

Accounts of more than 400,000 Local Government members were transferred this past June. Significant customer service problems emerged, prompting unexpected expenses to satisfy members, including $1 million spent to overnight debit cards that had correct member addresses.

Civic is also dealing with more souring loans. As of Dec. 31, $225 million of loans were at least 60 days delinquent, up from $211 million as Sept. 30. That represents more than 7.5% of Civic’s loan balance of $2.95 billion. Delinquent rates of less than 1% are common at most banks and credit unions. Its net worth ratio was 7.07% of assets.

Civic reiterated today it’s moving forward. “We have addressed these issues with decisive action as they emerged to reduce operating expenses and ensure the long-term strength and stability of the organization,’’ Civic said in the statement.

Separately, SECU reported a net profit of $401 million in 2025, according to a recent regulatory filing. Delinquencies of more than 60 days totaled $991 million, or about 1.7% of assets. It reported reserves of $5.5 billion and a net worth ratio of 10.1% of assets.

In a members’ newsletter last month, SECU CEO Leigh Brady said “we have experienced strong growth in membership, loans, and deposits.’’ The institution is also preparing to launch its new digital platform for members.

SECU now has 2.94 million members and 7,700 full-time employees, compared with 2 million members and 5,526 employees in June 2015, according to the credit union’s government filings.