Tuesday, July 2, 2024

Hope You Noticed In Yesterday's Post How Steep The Slide Is Getting...


            ... SECU, taking the plunge? 

The 7/1/2024 post [link] responded to a commenter's question: "Is it true that SECU's loan losses have historically been less than half of other peer credit unions ("industry standard")?

😎 The answer over the last 20 years: YES!

✅   SECU loan loss average: .28%  CU peer loan loss average: .58%

Hope you noted from the data that over that 20 year period - regardless of the ups and downs of the economy, interest rates, wars, the Fed or "the backwardness" of the fair rate for all, non-RBL lending practices - SECU outperformed the "industry standard" in 17 of those 20 years. Here go back and check it out again [link to 7/1 post].

When did SECU lending performance start sinking? [red indicates the better ratio]: 

2004-2018 SECU had the better ratio

   2019   SECU: .43%   CU Peers:  .46%

   2020   SECU: .30%   CU Peers:  .36%

   2021   SECU: .20%   CU Peers:  .19%   What happened at SECU in 2021?

   2022   SECU: .35%   CU Peers:  .24%        ... got worse in 2022?

   2023   SECU: .62%   CU Peers:  .43%              ... and then slid even further in 2023?

😎  Well, the Executive leadership Team (ELT) has told the staff, the SECU Advisory Boards, and apparently the SECU Board three reasons for the plunge in performance:  

 1) It's happening to all credit unions. - If you just look at the CU peer averages above for 2021, 2022, 2023 you'll see this is not exactly true. Peer credit unions are performing below historical loss levels, SECU is over twice its historical loss levels - and climbing, or sinking, whatever.

2) It's "Mike Lord's (former CEO)" fault. - The claim is that the losses were "embedded" in the loan portfolio . "Mike Lord" created these losses under those "fair rate to all" loan policies, before "We" arrived in 2021. "We" didn't make these bad decisions! 'Course the obvious question is why did the fair rate to all lending policies only start to fail in 2021, 2022, and 2023 - after the "We"  arrived?

3) The higher loan losses include that @$30 million snafu with the "Cash App" software in 2023.  - Still hard to understand why a major operational mistake was included in loan losses [boosting the ratio by .07% from "very large" to "OMG"]; but okay,  the "We" at least accept responsibility for that one - 'cause "Mike Lord" was long gone and 2023 wasn't a leap year!

😎 But let's pause a second and see what's happening with the "We's" lending/loss performance in the new, clean slate year 2024

    ✅ As of March 31, 2024: SECU loan loss ratio - .86% 

                                                (3x the 20 year average!!)

                                            CU Peers loan loss ratio: .58%  

                                               (same as 20 year average) 

😎  ... certainly hope the SECU Board isn't taking at face value what they may be hearing about their "new/new lending" policies... because the yacht appears to be taking on a lot of water!

The "We" seem to be running out of excuses... and to be slip sliding away!