Thursday, June 27, 2024

About That Soaring Delinquency Rate? According To SECU: "Everybody's Doing It"! ... through the roof!

Many SECU members have expressed their strong opposition to the discriminatory overcharging of risk-based lending (RBL), which is highly correlated to the race, age and gender of a member . The wrong members are being unfairly overcharged for the wrong reasons, which is detrimental to the financial health of the members -  and ultimately catastrophic for the reputation of the Credit Union. 

The SECU Board - and particularly the Executive Leadership Team (ELT) - have pooh-poohed those concerns and trumpeted the great improvements in efficiency and effectiveness that "tier-based pricing" (TBP)  has brought to SECU lending! 

When members point out that the financial results - in terms of loan losses and loan delinquency -  don't support those claims, the ELT becomes a bit miffed and has pouted authoritatively that those poor results are "industry standard". "Everybody" is suffering increased losses and delinquency due to rising rates, the Fed, mounting inflation, a weak N.C. economy, climate change, 2024 being a "leap year", the phases of the moon, and global warming, i.e. - "It's not our fault!"

The surge in loan losses and delinquency under "RBL/TBP" is costing the SECU membership literally hundreds of millions of dollars each year now.

✅ Let's take a look at how the 10 largest credit unions in North Carolina are faring with loan delinquency under exactly the same economic circumstances as SECU! 

 (Name of CU and 60-day delinquency rate at March 31, 2024)

  1. SECU  (Raleigh)                2.07%
  2. Truliant  (W-S)                     .95%
  3. Coastal  (Raleigh)                .56%
  4. Local Gov't  (Raleigh)        2.67%*
  5. Allegacy   (W-S)                  .44%
  6. Self-Help  (Durham)           . 95%
  7. Skyla  (Charlotte)                .66%
  8. Latino  (Durham)               1.10%
  9. Marine  (Jacksonville)          .92%
  10. Ft. Liberty  (Fayetteville)     .62%

✅ You'll note that all the other large credit unions in North Carolina (except Local Government*) are managing their loans with a delinquency rate generally less than one half the rate of SECU - regardless of the Fed, climate change, or the phase of the moon.

You might also like to note the SECU 60-day delinquency rate was 1.16% at March 31, 2019 vs. 2.07% in 2024 - granted 2019 wasn't a leap year!

This is not a minor matter for SECU, regardless of the pouting!

* SECU makes and "collects" most Local Gov't loans - the 2.67% ratio may be one reason why LGFCU is seeking "independence"!