So, SECU New Direction/New Culture has so far led to a reversal in the historic growth of SECU and a "SpaceX" increase in operational costs. But wait, there is more good news....
But first, lets back-track a minute. I was asked for a few more details on the $290 million increase in yearly operating costs.
❓ Did the SECU Board have an "expense-to-assets" (translation: operating costs) "target" like it did for asset growth (see 5/14/2023 post)?
✔ Yes, the SECU Board approved "target" for operating expense growth was "2.00% of assets". So, the current 2.28% expense ratio is +14% above the SECU Board's own approved target. In layman's terms, folks would say SECU is at least $70 million "over budget" for the 2022/2023 fiscal year? (Would appear it will reach @ +$100 million "over" at fiscal year end 6/30/2023)
❓What is the "industry standard" for the "expense-to-assets" ratio for other large credit unions? Is SECU better?
✔ Prior to the SECU New Culture/New Direction regime, Mike Lord and those highly trusted "legacy" SECU employees operated SECU at a cost one third less (1.70%/2.58% = 66%!) than the peer industry average of 2.58%. If you really want to get nervous, you should be aware that the upper limit on the SECU Board approved expense-to-asset range is the "industry standard" ratio of 2.58%.
If the SECU Board moves toward "the industry standard" as the norm - as they have on many other SECU measures - the difference in the current ratio of 2.28% and a move to the industry standard 2.58% will cost you and other members an additional $150 million in operating costs yearly?
The numbers get so large that you don't want to believe them - right!? It truly is hard to face the reality of what has occurred at SECU over the last 18 months...but the current SECU Board is only getting started - so beware!
❓Well, certainly the astronomical rise in operating costs comes from all the catch-up expense of installing new technology, since "SECU hasn't updated its technology since 1983" (as stated by the current CEO in the Triangle Business Journal - 3/6/2023)?
✔ For the record, that quote is one of the greater bald-faced lies ever told in the history of mankind! But y'know, as he says: "Hooty whoo!!! 😀😀😀"...and all that!
While it is hard to identify specific technology costs in the slender financial information the SECU Board has made available, technology expenditures do not appear to be the major culprit - yet! Why? Because, major technology upgrades are accounted for on the same basis as say buying a building - you don't "book" most of the cost all at once. A building and major technology are "expensed" over their expected "useful lives".
An example would be easier to follow: If you bought a $10 million building (or a technology system) which you thought would last 20 years, you would expense the building (or tech) at the rate of $500,000 each year for 20 years ($10 mill/20 yrs =$500k per year) . Alright, so you may have to take that one on faith, but the key is SECU hasn't made many of those major technology decisions as yet - the recent "✈jet set deal✈", just signed with NCR in early May, 2023, tells you as far as technology costs go - "the best" is yet to come, stay tuned!
❓Then where is all the money going?
✔ Wanna guess? We'll look at that tomorrow.
... don't forget to guess like you were an SECU Board member!
There is no doubt that SECU is paying Cornerstone Consulting millions and millions of the member's dollars annually to do Gym Haze and the Board's job for them.
ReplyDeleteHow come previous CEOs did not pay exorbitant fees for a "consultant"? Well, gonna climb out on the end of a limb here and suggest they did not need one cause they knew how to do their job.
In those days SECU had continuous growth, higher deposit rates, fair loan rates (no discriminatory based lending), outstanding financials, motivated staff, and equitable pay. How dare this CEO and the Executive staff enrich themselves at the expense of the members and on the backs of their co-workers.
The Haze Sadness Machine and this Board have been a disaster for the members (and most of the hard working employees).
The Members Deserve Better
Not like nobody tried to help him. Hell, Mike Lord stated that he was going to stick around a bit to help, show him the ropes. You know, southern hospitality and immediately felt he wasn't wanted. There is a difference between homegrown and outsider.
DeleteExcept as far as I can tell, Cornerstone isn’t doing anything. We’ve wasted a year working on projects that never should have gotten off the ground, while ignoring pain points that should should have been a priority. Unfortunately, no one in upper management has taken the time to talk to employees to determine what we actually need.
ReplyDeleteBut, but they did the "anonymous" employee survey! You know, where they asked the employees how they felt about the direction SECU was going. Excuse me, not the correct term I used based on our new culture. I meant to say Team. Our so called anonymous team survey.
DeleteOverconfidence by a leader can be disastrous, as with what happened with JCPenny in 2011.
ReplyDelete"In retrospect, Johnson and JC Penney seem like a horrible match. All along, Johnson insisted that he absolutely adored the venerable JC Penney brand. But if he loved it so much, why was he so hell bent on dramatically changing it, rather than tweaking and gently reshaping as needed?" -Time.com
Under Johnson's leadership, JCPenny lost $4 billion in sales.
The difference with JCPenny and SECU though, is... SECU was doing great and didn't need fixing; maybe tweaking and gentle reshaping as was happening prior to the new CEO.
Very disturbing, but a perfect example for where SECU is now, thanks to Ayers and 5 Board Members who voted in someone hell bent on breaking our credit union. Too many similarities between Johnson and CEO Hayes ... and now he's on target to have the same amount of losses. Ayers and Board still supporting their decision, one day we will understand.
DeletePlease resign ! No one loud you other than she, them, we, whoever!! Not I!!!
ReplyDeleteNeed yard signs at each branch! Fire Sanford! Fire Garland! Fire Parrish Now!
ReplyDeleteDear Board of Directors, for God's sake are you idiots? Relieve us from your mistakes...we're in big trouble and you need to get your mess together, now!
ReplyDeleteGood luck on getting a*holes to act! If they'll screw the members of SECU, then they're also screwing the folks where they work - UNC, Duke, Utilities, community colleges, Crime Control.
ReplyDeleteThe retirees are a bunch of junket junkies...and Alice Garland has been bad news in Raleigh for over 3 decades. Just ask around about her...OMG next chair?
Does he really think (or she, her, them think we wanted to see him in OUR grassroots for a underserved accomplishment. I will directing an email to the publishing journalist / magazine to let them know exactly how Haze rolls!! Totally underserved!!
ReplyDeleteDoes he really think (or she, her, them think we wanted to see him in OUR grassroots for a underserved accomplishment. I will directing an email to the publishing journalist / magazine to let them know exactly how Haze rolls!! Totally underserved!!
ReplyDelete