SECU Financials - Benchmarking To The SECU Board's 2023 "Strategic Plan" - On The Level?

... Esse Quam Videri.

"To Be, Rather Than To Seem."

Was asked to clarify a couple of ratios - "Capital to Assets" and "Expense to Assets" - which were put forth as "Key Goals" in last year's SECU Board approved "Strategic Plan". Here's what the Strategic Plan said:

From SECU Board's 2023 Strategic Plan: 

"✅ GOAL #4: Protect and Position the Organization for Maximum Impact.  As a financial cooperative, we take to heart that prudent stewardship of our member’s money is of utmost priority. Key success factors and ways that we will monitor our progress include: "

"●  Maintaining capital ratio between 8% –10%." 

"●  Achieving an expense-to-asset ratio of 2%.  "

✅ Here were the results:

 

1.  First, look at the SECU Board approved "Targets" on the left side. Both year end ratios are above the Board's target. The Capital to Asset ratio even exceeds the Board-approved acceptable range of 10%!
2. Recall that SECU has boosted assets by $5 billion with that "unusual" loan from the Fed. 
3. If assets were more "on the level", the ratios would be higher [you simply deduct the $5 billion loan].  The more transparent ratios are: Capital to Assets - 11.26% - and Expense to Assets - 2.42%. (It would appear that the Expense to Asset ratio, too, will exceed the Board-approved range in the near future.)
   
4. What does this "off target", "beyond the range" management of capital cost the SECU member-owners? Holding +2.26% in excess capital (11.26% - the 9.00% Board approved target = 2.26% excess) equates to @ $1.1 billion being unnecessarily withheld from SECU members - that's why your credit union savings rates remain well below market! The Board could return those funds to the members by increasing the rate on all MMSA and all share accounts by say +3%  for all of 2024. Your MMSA rate would rise to @4.75%, your share rate would rise to @3.25%. Think SECU members could use an extra $1+ billion in their pockets this year? [Why not do a "raise your hands" member survey and ask us?]  
   
5. What does the "off target" management of operating expenses cost the SECU member-owners? The difference between the Board approved target of 2.00% and the actual 2.42% is an excess, over budget cost of $200+ million annually!

SECU is a member-owned  cooperative. When the SECU Board is "off target" on the management of capital and operating costs... the members are paying for these excesses by the SECU Board.

  ... as they say "A billion here, a billion there, and after a while you're talking about real money"!  

It's your money, your credit union, your choice... not "theirs".

SECU - Consider This: Chapter 25 - The NCSEAA Unicorn.

... different by design! 

Esse Quam Videri - "To Be, rather than to seem."

You read in Chapter 24 [link] how aiding SECU members' kids apply for college (FAFSA) helped create a powerful relationship of support and trust between the Credit Union and the powers-that-be in the North Carolina education community. Relationships of importance are always built on trust. Are you for real, or are you just hype? In it for "the most profitable", or in it for the purpose? Is this about you (the"We B's"!), or about us? "To be, rather than to seem"? Doesn't usually take long to find out, does it.

North Carolina had a unique, cooperative system to help its citizens obtain, manage and repay student loans. Student loans are a difficult animal with lots of moving parts, complex rules, and much uncertainty. In 1955, N.C. financial institutions (banks, credit unions, insurance companies, and others) established the College Foundation Inc.(CFI), a non-profit, to manage the student lending process from application to repayment for North Carolinians - yes, it was a unicorn! 

  In 1965, the The North Carolina State Education Assistance Authority (NCSEAA), a State agency, was added to increase funding availability by the issuance of bonds in the market. Going to stop right there before we fall off a complexity cliff. Here's all that means: Demand for student loans was extremely high, NCSEAA borrowed the money to fund those loans from the public. The implied backing of the State of North Carolina helped with selling the bonds. Okay?

Where is this going? Cut to the chase.  It was  a super system for all involved, especially North Carolina students and their families. Worked exceptionally well until the nationwide financial collapse of 2009/2010 ( yet another chance for you to watch "Inside Job"!). Banks, financial markets in general, were on the ropes. Funding simply dried up, no one could tell how bad it was going to be (sort of a Covid-like pandemic in finance!) North Carolina kids still wanted to go to college, but NCSEAA couldn't find any funding. That's what happens when the by definition inbreeding of "industry standard" (also called "group think") hits the "everybody is doing it" wall. 

So what? The "what" is the value of a North Carolina based financial institution, owned, controlled and laser-focused on North Carolina and its citizens - the State Employees' Credit Union. SECU stepped up and bought $1.5 billion in NCSEAA bonds so North Carolina kids could go to college that year, and the next, and the next. Not something that SECU had ever done before - definitely not "industry standard" -, but a win-win for everyone in North Carolina.

Didn't know that did you? Could it be that SECU, if driven by purpose and principle rather than profit, could be a an invaluable asset, a jewel, a treasure for the members and all of North Carolina?

Which do you as a member prefer - unicorn or "industry standard"?

... it's your choice, not "theirs".