Saturday, November 18, 2023

SECU - Moving In The Wrong Direction On Loan Administration: "We Have Met The..."  Lots of controversy among members about the direction of SECU. 

Much has to do with the real and increasingly apparent declines in assets, in member service, in employee morale, and in the reputation for fairness the Credit Union had earned. Plenty of signs that these drops in quality are not just a matter of opinion or a mere difference in outlook - or culture. These are hard and soft dollar losses across many measures of performance and productivity. 

✅ Members are receiving less from their credit union while paying more - often much more.  

Easiest example is in loan performance. You probably have noticed much mention in the comments about the major Board and senior leadership snafu, resulting from the less than astute "centralization" of SECU loan administration and collections.

Previously, the origination, monitoring, and collection of loan accounts was managed at the branch where the loan was made. By utilizing the strong bond between local loan officers and local member borrowers; if problems arose, the local staff had the ability to work with members to find positive solutions. And again yes, unexpected, bad stuff does happen to some very fine members; and yes losses do occur. SECU historically had enjoyed one of the lowest loan loss (charge-offs) ratios among peer credit unions. At 12/31/2021. SECU's charge-off ratio was .19%, about 2/10s of 1%! Even though the current SECU Board would lead you to believe that SECU borrowers were a bunch of n'er-do-well, non -"A-paper" slackers!

Take a look at the cost of that management "centralization" error to you as a member. When the current regime came into leadership in late 2021here were the delinquency/loss stats they inherited: 

 At 12/31/2021 

# of Delinquent loans:   12,148

$$$ Delinquent 60+ days:  $352,881,000

Total Charge-offs for year 2021:   $50,473,000 

 ✔ Results after the "centralization snafu"... losses up by over $45 million - up over 90%!

  At 12/31/2022

# of Delinquent loans:        25,909

$$$ Delinquent 60+ days:  $556,172,000

Total Charge-offs for year 2022: $95,535,000 

✔ But it gets even better!  Take a look at charge-offs so far in 2023...

1/01/2023 through 9/30/2023: 

Total charge-offs for the first 3 quarters : $122,000,000 

... it would appear that total charge-offs at SECU for 2023 will be 3 times the level of 2021 prior to the centralization of loan administration by SECU management. 

... SECU does seem to have reached "industry standard" on this one!