Review And Reflection - Part 8 : A Crisis Of Confidence - The Smoking Gun # 2

  ... nice doggie!

From: Maurice Smith
Sent: Thursday, May 12, 2022 7:07 AM  

To: HAYES, JIM [link to full text here]

 
➜ "I have been giving additional thoughts to our conversation about the potential combination of SECU and LGFCU."...  "We have had exhaustive dialog with and among our Board about the prospects.... To be frank, there is hesitation among our Board about a merger."

😎 For those of you who aren't familiar with former LGFCU CEO Maurice Smith, he is a world-class diplomat ... "there is hesitation among"... is about as nice a way of saying "hell no!" as I can think of, agree?

➜ "I’ve heard you imply that LGFCU is a bigger weight to SECU than you would have expected. This is the first time I’ve heard this from SECU management."[in 40 years!]

😎 Mr. Smith is also a savvy, practical business leader. When confronted with the "pressure" of being designated as a "bigger weight" problem by his "40-year trusted partner SECU", Smith appears to be applying the "nice doggie deferral strategy". What's the "nice doggie deferral strategy"? Well, if you're ever confronted with a severe, volatile business problem - much like being confronted by a snarling, vicious German shepherd - just keep your cool, keep smiling and saying "nice doggie, nice doggie",  until you can get hold of a big rock! (Don't laugh, its sound business advice!) Smith applies it well in defense here.

😎 The SECU CEO has "manufactured a problem" with the "core" technology conversion vendors' concerns. First, the SECU CEO's job is not to represent a vendor, unless there is some unknown ulterior motive. Second, SECU had negotiated dozens of IT contracts which included joint processing for SECU, and partners LGFCU, Latino, Greater Kinston, and NC Press Association credit unions over several decades. Never was any problem to reach a vendor agreement. Check the record!

😎 But here, take another listen to the SECU CEO's explanation of all this in the extended SECU Board-approved Fireside Chat video [link... see @ 25:00]. It's sorta difficult to reconcile the CEO's offhand , aw shucks presentation that he and the SECU Chairman got together and had a "great dinner" with LGFCU leaders who said "no" to the merger. This "great dinner" was 6 months after the SECU CEO first proposed a merger to LGFCU and occurred even after Mr. Smith had diplomatically told SECU "hell no" on May 12, 2022 as you see above. What was LGFCU saying "no" to [according to the SECU CEO in this video] if there wasn't a proposal?

😎 BTW did you know that LGFCU contributed @ $50 million annually for its participation in that trusted-partner, cooperative operations effort with SECU? LGFCU always paid its share of the costs for tech changes and all other operational costs incurred by SECU.  In the video, according to the SECU Chair, the loss of that $50 million will not affect SECU's business operations. A loss of $50 million in annual revenue won't hurt??? ... wanna bet?

➜ "We prefer to work collaboratively with you to achieve both our goals.  Our near four‐decade history of collaboration is no accident. Our credit unions forged a relationship built on mutual trust and partnership. I see no reason this can’t continue in a newly re-imagined future. "

😎 At May 12, 2022 it doesn't really appear that LGFCU is preparing to execute that "long-planned" exit to independence espoused in the November video by Mr. Naylor, [link... see @ 25:35], does it? Least not according to LGFCU's former CEO of 25 years!  Somebody is telling "a story" here. (As Mr. Naylor says "I'm trying to stay away from using the word lie".) 

✅ Why did the SECU Board choose to "tell this story" to 2.8 million SECU members?

 

  Lack of transparency by any group - motives, competence, poor judgment? - is "a red flag" that erodes confidence and destroys trust.

 

Review And Reflection - Part 7: A Crisis Of Confidence - The Smoking Gun # 1

Despite having months to prepare, stage, and edit its response to the 2022 Annual Meeting resolution, the SECU Board failed to level with the SECU membership on most of the questions raised. Why would the SECU Board as a group chose to do that?     

In "The Smoking Gun" post [link] and "Exhibits" [#1] and [#2], you find part of the information - documented and verified, I had before watching the SECU Board-approved Fireside Chat videos. 

What the SECU Board published didn't seem to conform with the facts.  In today's world where everything - like it or not - is "on the record" somewhere, one has to wonder why the SECU Board chose not to give the members straight answers? Lack of transparency by any group - motives, competence, poor judgment? - is "a red flag" that erodes confidence and destroys trust. Why would the SECU Board choose to do that?

Lets study this a bit (again here is the SECU Board's response [link] at 7:41):  

 1) "Meeting on Merger with SECU Jim Hayes  [full text -  #1] - January 11, 2022"

"... a bit more assertive than our earlier dialog.".... "Jim said the merger question needs to be answered"... "Jim said no less than 4 times that SECU already serves our members and have our members’ data."... "It is his custom to frame up issues with the Chairs" ...

😎 So, you see that a) the merger discussion started in 2021 ("earlier dialog" - and if you must know, that prior meeting was at the Taverna Agora in Raleigh),  b) pressure is being applied by the "40-year trusted partner SECU" who - (can I explain this to you "no less than 4 times"!) - already serves LGFCU members and has all their data, and c) Mr. Hayes is actively pursuing the merger in league with his Chairman ("with the Chairs").

😎 As advance guidance to the potential "yes-butters" of this post! To give you an idea of the depth and detail of the 2022 documentation gathered, and now housed in those ""two full filing cabinets, etc, etc", the January 11, 2022 breakfast meeting was at the City Club in Raleigh. Would you like to know the time, who ordered what, the total bill ...whether they are a good tipper? Just for the record, I'm not guessing. You shouldn't either.

In today's world where everything - like it or not - is "on the record" somewhere, one has to wonder why the SECU Board chose not to give the members straight answers?

"Jim [Hayes] asked me how I felt about this. I confessed I am struggling personally. LGFCU is not a bank model where we build a book of business to sell out later for a large payout. Merger feels like failure to me. "

😎 Hope we can all agree that Mr. Smith wasn't pursuing SECU to transact a merger. We all know where this started.

✅ But here's what you really need to look out for as a member-owner of SECU:

The statement about not being "...a bank model where we build a book of business to sell out later for a large payout."  Should give every SECU member a reason for concern. Why? 

😎 Lack of transparency by any group - motives, competence, poor judgment? - is "a red flag" that erodes confidence and destroys trust.

 

... we'll do the other half (May 12, 2022) a little later [Exhibit #2]... nah it doesn't get better. 

Review And Reflection - Part 6: A Crisis Of Confidence

... trying, unsuccessfully!

Apologize for the long-winded posts - but here's one more!

After the re-election of the four board incumbents at the 2024 annual meeting, it was time to pause, review and reflect. Have the members spoken? Do members agree with what has occurred at SECU over the last three years? Do members understand why there has been such a high level of discord? 

Several groups of members will, over the next two weeks, be considering those questions, and also the "What next, if anything?" question.

As input into those conversations, I wanted to be clear on how I arrived at the "Houston, we have a problem..." point with SECU; and why that concern continues. Hope from the last few posts you'll note that neither the new direction, new culture, nor new policies triggered that personal crisis in confidence with SECU.  Those changes began in September, 2021. This blog and commentary didn't start until January, 2023. 

Despite what has been inferred, I had not become a "disgruntled former CEO" (though I assure you I am now!). By 2022, I had been retired for 6 years and was happily "gruntled"! ( A little open-heart surgery and sauvignon blanc can help one achieve "a new perspective".) Over those six years since 2016, there had been negligible contact with SECU of any type, including staff and Board - no kibitzing, no consulting, no involvement at all. The chord had been thoroughly severed when I left; ask around, that statement is easily verified. 

The October, 2022 resolution was polite and respectful, the questions asked of the SECU Board focused on explanation, not condemnation [link to read]. Give the SECU Board a fair opportunity to provide support for its new direction, new culture. Easy enough. 

That didn't happen. The SECU Board "did not level with the membership". I chose one example ["Where the Problem Lies"] to illustrate the crisis of confidence which was created

In "The Smoking Gun" post [link] and "Exhibits" [#1] and [#2], you find the history of information (documented and verified) I had when watching those SECU Board approved Fireside Chat responses. 

😎 We'll take a more in depth look at "The Smoking Gun" post [link] and "Exhibits" [#1] and [#2] later today... and why you might worry "something ain't right" at SECU.

Tomorrow, we'll take a look at a different example of why concern over the judgment and lack of transparency of the SECU Board continues to grow.

.... wearisome process isn't it, worrisome too...