Tuesday, February 14, 2023

SECU Risk-based Lending #3

 To: SECU Board of Directors


Dear Chairman Ayers,

Continuing to pursue with you the issue of implementing risk-based lending (RBL) at SECU, which you and the SECU Board have approved - in error in the opinion of many SECU members.

The first email - RBL # 1 - debunked the idea that the absence of RBL had somehow caused SECU delinquency to surge; when in fact, the internal snafu of centralizing collections was the primary cause - increasing delinquency from .83% in April 2022 to 1.87% at year end, with reported loan losses rising by 175% over 2021.

RBL # 2 noted that the impression SECU is not serving "A" paper members is absolutely false and that your approval of RBL will substantially damage almost 700,000 members (the "C", "D", & "E" folks) - over 59% of all SECU borrowers. It was also obvious from a quick net search, that your new RBL "A" paper auto rate (of 5.75%) isn't going to be particularly competitive. I did fail to point out that although SECU assets declined (by -2.2%) at the end of 2022 - for the first time in 85 years; outstanding member loan balances increased by over $4+ billion during 2022 - why again are you trashing a system which clearly works so well for the members?

But, for this round, let's take a specific look at the actual increased cost of your new risk-based lending program to the majority of SECU member-borrowers. Here's one example of the new RBL scheme, which you are using to train your staff - the cost of financing an $18,000 used auto over 5 years:

The new RBL rate tiers approved by the SECU Board are as follows:
  • "A" paper - Credit Scores from:  720 - 850
  • "B" paper - Credit Scores from:  660 - 719
  • "C" paper - Credit Scores from:  600 - 659
  • "D" paper - Credit Scores from:  540 - 599
  • "E" paper - Credit Scores from:  300 - 539

The Truth About That Super Bowl Ad


To: SECU Board of Directors


Dear Chairman Ayers,

image.pngBy the way, lot's of members were amused by the "joking" reference to the possibility of an SECU Super Bowl Ad; and of course, were relieved when there wasn't one! Now, I haven't mentioned to anyone - not a soul! - that word has it around WRAL, that you and the SECU Board actually had purchased Super Bowl ad time - but pulled it at the last minute (but still had to pay for it!). Not sure why you did that, but let's just keep that between ourselves, okay? I won't tell and I'm sure you won't!  ('Cuzz you'll duck!) No need to be transparent on everything, right?

https://preview.redd.it/xpa087pjpop31.jpg?auto=webp&s=c4cc285cd5776753e1a55ca4d3b00cbb33abb56e      "Whoever is careless with the truth in small matters cannot be trusted with important matters" - Albert Einstein

SECU Tax Prep -- Tiny Members Were Such A Bother!

 To: SECU Board of Directors


Dear Chairman Ayers,

Promise I haven't forgotten you on your most important attack on the members' pocketbook - risk based landing (RBL)! But thought a little interesting aside on the issue of dropping tax preparation services might provide you and the SECU Board with some relief.

According to your response to the Annual Meeting Resolution on tax prep, you dropped the service since it served such a "tiny segment of our membership"... and "...in 2022, fewer than 2% of our members used the program". 'Course some folks would say that even 2% of 2.7 million people is a lot of folks. And, folks trying to be fully transparent would probably have also noted that the pandemic and your addition of a fee might have had a "tiny" impact on the level of participation in 2022. Would have been helpful to have noted that pre-pandemic, SECU processed over 100,000 + returns (and rising!), which is closer to 4% of the membership, than 2%. Admittedly, SECU tax prep members, for the most part, weren't "A" paper folks, so...well, just sayin'.

Anyway as you so clearly stated in your Resolution response: "Although our staff diligently and competently prepared tax returns for several years [over 10+], we've come to believe that members are best served by receiving tax preparation services from providers that specialize in tax preparation services."   Does that sentence really make sense to you? "Although our staff diligently and competently prepared tax returns, we've come to believe that members are best served... "...by someone else?!?!

So as you may not know, Mr. Jim Barrett, CEO of Pisgah Legal Services (PLS) in Asheville - with whom SECU has collaborated for years! - contacted one of your retired, "SECU legacy" senior leaders in Asheville to ask for some help. [First, can't say enough about all the good works that Mr. Barrett and PLS have done over the years in western N.C. [link - here look for yourselves],]  Mr. Barrett said VITA tax returns weren't getting done this year - and folks in western N.C. are in jeopardy of penalties, delayed refunds, and most importantly, the loss of the earned income tax credit (EITC), which so many rely on to get by.  Was there any way that SECU could help? Any way that you and the SECU Board might change your minds?  That "legacy" leader of course gave Mr. Barrett the local SECU contact information.

In general, North Carolinians earning less than @$60,000 can qualify for up to $7,430 in an EITC (a tax credit or a direct cash refund!)

And the good news is once again you have backed up on a bad decision (like centralizing collections - remember RBL # 1?) - well sorta!. Pisgah Legal Services got this response from SECU: "Good morning Jim, I am sorry for the delay in getting back to you. We have gotten the go-ahead from HR and Legal to send an email to former SECU tax preparers to see if they would be interested in preparing taxes for Pisgah Legal." Guess the SECU Board has now decided that rather than pay SECU employees extra to be trained and to prepare tax returns, as was done in the past; it is better - and less "disruptive" - to ask them to do it for free on their own time! Certain that the staff are very appreciative of this new benefit you have provided!