SECU attracts member deposits in a variety of ways, but the 4 largest savings categories are: 1) Money Market Accounts (MMSA) - $16.4 billion, 2) Certificates of Deposit (CDs) - $9.9 billion, 3) Share accounts - $6.8 billion, and 4) Individual Retirement Accounts (IRAs) - $3.4 billion - a total of $36.5 billion. Throw in checking balances ($6.8 billion) and these 5 accounts equal over 96% of total ($44.7 billion) SECU deposits. Take a look:
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| SECU - October, 2023 | |
Let's not worry about the checking account balances for a moment, since most of us aren't too concerned about the rate (0.05%) earned on that account. And acknowledge that SECU is valiantly trying to be market competitive with short term CDs - with good results, increasing balances by $5.7 billion over the last year.
The deposit dilemma - and risk exposure - lies with the other 3 types of accounts: MMSA - rate 1.1%, Shares - rate 0.25%, and IRAs - rate 2.25%. SECU has $26.6 billion in member deposits earning @1.00% - in a "5% market rate world". Those 3 accounts have declined by $8.7 billion over the last year. You will also note that every other type of savings account on the list (with one very small (HSA) exception) has also declined. Overall additional member savings withdrawals were down another $140 million in October alone - maintaining an unbroken string of continuous decline in 2023.
Will the decline in deposits continue into 2024? Do you think interest rates will come down significantly with a projected Fed budget deficit of $2 trillion in 2024 alone? Will inflation decline much, will prices at Food Lion stop rising, will employees quit demanding wage increases to keep up? Do you believe in the "Tooth Fairy"?
SECU can mitigate this risk by selling its treasury security portfolio and reinvesting those funds (currently earning @ 1%) into current rate investments earning @ 5%...and begin immediately paying SECU members much more competitive rates on their SECU savings.
Why wouldn't the SECU Board "do the right thing"? Probably because the Board is incorrectly listening to its nouveau "for-profit mentality" leadership team, who would view such a move as "a loss of profits". Well, if it's a "loss" which of the member-owners lose? Name just one! You can't!
Restructuring the portfolio to 1) eliminate the safety and soundness risk of further deposit losses, and 2) reinvesting to boost earnings immediately to raise member savings rates is the correct course for a not-for-profit cooperative Board.
It's simply a redistribution of prior earnings to the member-owners in a credit union. The capital reserves, member equity, retained earnings - whatever you would like to call it - of SECU belong to the members and are held to be used in unusual economic circumstances like we confront today. Why else would you be holding the reserves?
Let the Neanderthal "for-profiteers" think as they wish - as shallow as that may be! In the not-for-profit, member-owned credit union world, the SECU Board should only be focusing on SECU "Members First"!.
... unfortunately I think they'll "bet the ranch" and go with the "Tooth Fairy".
Referring to previous topics regarding the financial statements, billion + loan, recent huge expenses, fast forwarding the RBL, recent HR announcements and low deposit rates - just asking - is SECU in trouble? Has SECU ever been in this situation? I need some hope for the near future! - Charity
ReplyDeleteSECU is strong , safe and sound as the result of its past performance. The concern is that recent performance and a mis-vision by the Board for the future will produce "blockbuster " results. Last 2 years have not lessened that concern in any way...
DeleteWatch how assets, deposits, delinquency, loan losses and operating costs move over the next 6 months and you can draw your own conclusions. If the CU is on the wrong course, it will become clearer and clearer as each month passes...
But, SECU has a knowledgeable, experienced staff, very strong reserves, and a hard-earned, positive reputation with members, which can hopefully endure this period of wandering in the wilderness.
Thanks for the hope!! ;)
Deleteif you were in charge I'd have a lot more hope.. They are self-appointed shepherds, and they see us as their flock to fleece. Stupid people do stupid things ... They were in the catbird seat and what did they do? Next year will be a big year ... Ms Brady will have 6 months of playing CEO under her belt. What will she do to bring confidence back to the "investors"? (they understand that lingo)
Delete"The unsustainable, and still rapidly growing, U.S. federal government debt is a classic case of ‘‘in denial.”
ReplyDeleteDespite numerous congressional committees, bipartisan commissions, and votes, we are no closer to a solution to the debt crisis than we were more than a decade ago. In this timely volume, scholars and policymakers assess the United States’ fiscal constraints and provide new perspectives that are desperately needed in order to solve the nation’s debt crisis."
CATO Institute
Smart doesn't automatically give you wisdom ... I don't see 'our leaders' at SECU showing any wisdom at this point in time. I mean you basically laid it out for them the steps (for free I might add) to help fix this mess and it falls on deaf ears!
Maybe he should hire out as a consultant. This board (‘excluding the 3 newly elected)seems to like consultants advice. They don’t seem to value the ethics pre Hayes or business model. Too successful and not like everybody else! Rather pay mega dollars for bad advice from folks who don’t have a clue bout NCSECU.
DeleteThis stuff is pretty important to the lives of millions of members/owners.
ReplyDeletePeople can ignore important things…but they cannot escape the consequences of ignoring important things.
SECU members need to pay attention to the fact that these 'leaders' are 'looting the treasury' under the guise of 'updating SECU for the way they want it to be'!
By “they” do you mean the members who have increasingly chosen other institutions to meet their financial needs?
Deleteand if everyone moves then what? What would happen if SECU ceased to exist?
DeleteDeposit rates seem to be inline with other financial institutions that have brick and mortar locations. Internet only institutions are offering the 4 and 5% and typically a large balance is required. I’ve worked for SECU for 22 years and have found plenty to be angry about the past couple years, however the deposit rates is not one of them. Comparing the rates of online banks to one with physical branches is not apples to apples.
ReplyDeleteNo! NCSECU was always an "orange" to an apple comparison! It worked because of lots of things that this current(2 years) have changed. Local decision making, numerous basic products offered-- no bells and whistles-- by a versatile, knowledgeable staff at every branch. very flat organization without a lot of hierarchy. Does that sound like NCSECU today? focus ALWAYS on what is the best product for our members--state employees and their families, i.e. people of modest means. Now not only is the staff very hierarchically organized (and top heavy!) but so is the membership! People of modest means, people just starting out, people of color are immediately penalized by the new systems. Why could SECU offer such good rates in the past? Well managed for one. How are all the changes working out for all us members? Not well.
DeleteLangley FCU posted ad on FB this morning comparing their brick and mortar rate here in Raleigh up to 5% with SECU 1.1% and Wells Fargo 2.5%. Last time I checked Wells Fargo was brick and mortar too! Wake up SECU!
DeleteHow were we able to be competitive for 85 years?
DeleteJust for the record "Langley FCU" is an example of the type CU that the previous SECU Board seemed to want SECU to become. "Anyone can join", regional, commercial lending, little apparent member-owner involvement... just another "bank" branch out there in N. Raleigh! Nothing "different" about it. But quite a long way from an air force base CU in Va. created to focus on helping our military folks.
DeleteIf you move your money, can't blame you; but remember your funds will leave North Carolina, you'll be part of a CU that has no special focus on North Carolina.
...wouldn't it be better for the SECU Board to step up and fix the deposit dilemma...rather than force members to make this kind of choice?
SECU was created for state employees and their families. Not all of NC. But we decided that was ok. Let’s not pretend that SECU has always focused on its “core” membership.
DeleteYes. Step up and then Step Down!
Delete“Do the right thing”
ReplyDeleteAlso had an operating expense that was one of the lowest in the USA--even with branches in every county in NC!! As brick and mortar as one can get, and cheaper to operate than most all other credit unions while treating every member as equal to every other member. what happened? Alice Garland, Jo Ann Sanford, + 4 other soon to be gone board members who displayed incredibly terrible judgement by hiring Jim Hayes and encouraging him to run amok at NCSECU. It's like Humpty Dumpty. All broken and can't put him back together again. PLEASE RESIGN NOW! Give us our credit union back!!!
ReplyDeleteOur members loved purchasing bird houses. What was the cost to the organization for selling them? Why was it stopped?
ReplyDeleteThe gentleman who built them passed away.
DeleteBS! Still available...his family still is making them in Warrenton.. SECU just crapped up another super NC non-profit project.
DeleteBrady is just total BS. Needs to get out of the way so Board can move on.
My members enjoyed them. And they didn't take up much room in the branch. So sad. But that's unfortunately we have become accustomed to the last couple of years.
DeleteI am waiting on Leigh to make her first oh wow decision. If you want to save money get rid of Marketing, keeping the legacy employees, get rid of Team Green and Culture. Lots of money would be quickly saved. And let the branches do what they are asking to do. Put things back like they used to be.
Deletehttps://www.easternbluebirdrescue.org/frank.htm
DeleteCan you come back to this topic about the 5% market and explain selling the current portfolio and reinvesting at the current higher rates? If this is an option, what is the hold up? Why not cut the losses and recoup with the higher rate? At a time when it appears the organization is chasing every penny, what is the negative impact that would prevent the administration from making this decision?
ReplyDelete