Wednesday, January 31, 2024

SECU Financials: Yearend - December 31, 2023: Working Out As Planned?

As the SECU membership breathlessly awaits the Board's 2024 Strategic Plan (we're now entering the second month of 2024 without a plan, is that a problem?), it might be useful to review the results of the 2023 Legacy Board's Strategic Plan [here's a link to the 2023 plan].

Lots of ways to judge the effectiveness of the 2023 Legacy Board Strategic Plan at year end. But, one simple view is to look at the Board's own "scorecard": Here it is from the SECU financial statements:


😎 Of course transparency continues to be a concern "in many things SECU" over the last 2 years. 

Easy example is that SECU has borrowed $5 billion from the Federal Reserve at year end 2023 (to take advantage of a Federal government handout). Guess that's okay (though never done in the past), but you'll note that many of the Legacy Board's 2023 "targets" are ratios based on assets ("expense compared to assets" ratio, for example.) Inflating assets with that extra borrowed $5 billion changes the numbers, quite substantially in many cases. Will show you "the adjusted" ratios, too (without the $5 billion handout loan). For the record, SECU reported @ $54.6 billion in total assets at 12/31/2023, so the "adjusted ratios" will be based on $49.6 billion in total assets (less the $5 billion loan, okay?)

So here are your adjusted ratio numbers:

1) Capital-to-Assets - Reported 10.23%, adjusted 11.26%, target 9.0%. The Board is 2.26% over target (not even in range!), which means the Legacy Board is withholding unnecessarily $1.12 billion ($49.6 assets x 2.26%) in excess capital which could have been paid out to members in 2023. That's why members are not receiving a market return on their SECU savings accounts. $1.2 billion lost to the N.C. economy. 

2) Expense-to-Assets  - Reported 2.20%, adjusted 2.42%, target 2.00%. The Board is .42% over its own budget target of 2.00% - which is @ 25% over budget (2.42%/2.00%) - or over budget by $208 million! This is the highest expense ratio in the history of SECU.

3) Return-on-Assets - Reported .44%, adjusted .48%, target .50%. About on target, still with goal of "record profits"?

4) Loan-to-Deposits - Reported 75%, adjusted 80%, target 75%.  On target.

5) 3+ Month Delinquency - Anyway you want to calculate it, the worst reported delinquency in the history of SECU.

6) Net Loan Charge-offs - Anyway you want to calculate it, the worst reported loan losses in the history of SECU.

7) Asset Growth - Reported + 7.07, adjusted -2.7%, target + 4.50%. After adjusting for the Fed loan, the Legacy SECU Board is off their growth target by -7.2%.


... unbelievable!?