The National Credit Union Administration (NCUA) as you know publishes data on all credit unions at the end of each calendar quarter.
The "New/New" lending regime (including RBL) was pitched to the SECU membership as a way to improve the quantity and quality of the SECU loan portfolio. There was a brief surge in volume when the SECU Board finally lowered loan rates to be competitive, but that surge is now subsiding. On the quality side of that hype, let's check the results...
✅ NCUA - the "industry standard" - reports delinquency ratios for credit unions based on loans 60+ days delinquent. For some reason the SECU Board has chosen to ignore industry standard in its delinquency ratio reporting - choosing instead to report only loans over 90+ days delinquent ("3+ months" - see above).
If delinquency were reported at the industry standard 60+ days, the SECU delinquency ratio would rise to 2.52% (@$878 million) at 9/30/2024. The 60 day+ delinquency "peer average" for other large credit unions is 0.78%. In other words, SECU's 60+ day delinquency is over thee times greater (2.52% vs .78%) than our peers.
You'll note that delinquency continues to climb through November, 2024 - up @33% over the last 3 months (1.60% vs 1.20% in August) and up almost 60% over the last 6 months (1.60% vs 1.04% in May).
✅ Loan losses reflect a a similar pattern with little relief apparently in sight. November charge-off ratios indicate that loan losses in 2024 will exceed -$225+million - by far the highest loss rate in SECU history. Reported charge-offs have increased in each of the last 11 consecutive calendar quarters. The SECU annualized loan loss rate at November, 2024 (.61%) is triple the loss rate at December, 2021 (.20%) - three short years ago. SECU's rate of loss now exceeds the industry standard peer average by 31%.
😎 Will update any continued progress later this month when NCUA reports the year end 2024 results. Hopefully those numbers will not reflect 12 consecutive calendar quarters of rising losses, but don't bet the ranch on it!
At what point does the SECU Board acknowledge that the "New/New"... might be a "No/No"?
FYI, your comment about 11 consecutive quarters of charge-offs is false. Reported charge-offs declined from the prior quarter in 3Q 23, 4Q 23, 1Q 24 and 2Q 24. 4 of 5 last quarters have seen a decline.
ReplyDeleteOdd to highlight that anyway. One would expect the dollar amount of charge-offs to grow consistently as the loan portfolio grows in size. Growth in charge-offs dollars by itself is not a concern - especially when the loss ratio is dropping.
Where can we find these facts and the numbers to back them up?
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