SECU New Direction/New Culture - People Hyping People - "Legacy" Employees And "Travesty" Leadership!

   The long running motto for U.S. credit unions is the phrase, "People Helping People"...

...which is an apt description of what a cooperatively-owned financial institution - a credit union - should, at heart, be about. Banks are in a different business - investor-owned, profit-driven - focused first and foremost on commerce and business. Neither form of financial institution is better or worse - the two are just different, almost opposites. Up/down, left/right, over/under, yin/yang. Both types of financial institutions play an important role in the economy of North Carolina - both have a purpose.

But today, we're following up on "Where did the money go?" from the 5/14 and 5/15/2023 posts. The question arose when looking at the $290 million increase (up 34%!) in yearly operating expenses at SECU. Noted that it wasn't in the oft-fibbed "technology upgrades" - those increased costs mostly "lie" ahead!

So what did you guess was the primary driver of a 34% increase in annual operating costs at SECU?

 Well, what is the # 1 operating expense of almost every financial institution? That's right, the compensation and benefits paid to employees - "legacy" or otherwise. Guess, we need to stop here and explain "legacy employees". Apparently now at SECU, any employee who has been working at the credit union for more than @10 years is openly derided as a "legacy" employee - out-of-touch, adverse to change, just excess baggage. More on that later...

So, who is against paying the core, "they make it happen", dedicated employees well? Why, nobody of course! But, that's not exactly what appears to be going on for the average SECU worker. As with more and more things at SECU these days: "What you see, is not what you get!" - big time!

✔ First lets take a look at how the "average employee" is faring financially at SECU. These are the figures reported to the NCUA (that federal agency) at year-end 2021 and 2022. The average comp and benefits paid to an employee at SECU in 2021 was $83,605. At year-end 2022  (just 3 or 4 months ago!), the comp and benefits paid to the average SECU employee had "leaped dramatically" to $83,786!  

In other words, the average annual employee salary increased by a total of $181 during all of 2022, or about $15 a month! ["Wooty Hooo! - 😜"]

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✔ At September 30, 2021, when CEO Mike Lord retired from SECU, the credit union had 6,922 full-time and 78 part-time "legacy" employees operating a $53 billion institution. Now, even if you applied that $181 jump in annual pay to the whole group (FTE and PTE), that would only amount to a $1.267 million increase in operating costs - a long way from @ $290 million!

✔ How about new employees? Well, with assets shrinking, fewer branches, a branch employee "hiring pause" - plus all that new digital automation -, you wouldn't expect to find many new folks being added, would you? At December 31, 2022 SECU reported having 7,628 full-time employees and 511 part-time employees - over 1100 more employees in just 18 months! Do you kinda see a problem developing here?

Using that $83,786 average annual comp figure, an additional 700 full-time employees would cost @ +$58 million and 500 or so part-time folks @ +$20 million...so now we're getting somewhere. Make sense? Yep, you're right:"No it doesn't!"

✔ Has the SECU Board realized that staffing has gone berserk? Well, the good news is apparently so, as the employee figures for March 31, 2023 have leveled to 7,629 FTE (+1) and 527 PTE (+16) over December... the only problem is that comp and benefit costs continue to climb in 2023!

✔ Where's the "missing comp money"? This one is for you conspiracy theory readers/commenters. It's impossible to "deep dive" on superficial financial statements - there just isn't enough detail to track down a lot of questions. But the average comp and benefit figures don't quite seem to add up. For example, why would the average employee comp jump from $83,786 at 12/31/2022 to $89,505 at 3/31/2023 (just 3 months later)? Those types of quick jumps are usually associated with big dollar incentives, executive bonuses, sales quotas, or "pay for performance" type programs - which the current CEO firmly states are not practices used at SECU (and they definitely weren't in the past!) Should we take those assertions at face value?

✔  A parting puzzle for math wizards!  Lets say you had 7,600 employees whose average pay was $83,605 (see above) and you gave each of them a $175 per year raise and to the 10 "C-suite" folks you gave each a $5,000 raise (because they are that much more important; hey, check out last year's performance!) What would the new average comp and benefits be for the entire organization? 

That's right $83, 786, up @ $181 or about $15 per month (see above). Beware of "averages", they're a good way to conceal statistical "outliers"...or perhaps help hide even "out and out liars"!

Just sayin'.... "C-sweet"!