... bottom line.
The SECU Board's Strategic Scorecard for 2024:
😎 Some folks have said "You've been stalling!". They're right. But, one last look at the SECU Board Report Card and we'll get back to business.
The Expense To Asset "Key Ratio" is a measure of the cost of operating the credit union - branches, ATMs, equipment, utilities, employees - the normal pieces of the puzzle which are required for any business to function.
SECU, despite having one of the most extensive "service delivery systems" - branches, ATMs, call centers, web/mobile, etc - among credit unions, has long been noted for its low cost of operations - with a highly favorable, low "expense to asset ratio".
This ratio may also be viewed as an efficiency or productivity ratio. The lower the expense to asset ratio, the lower the cost to operate SECU, the more "bang for the buck" delivered to the membership for each dollar spent. The expense ratio is also a measure of Board and management effectiveness.
Prior to 2021 (before "new/new") the expense range was 1.75% to 2.25% with a target of 2.00%. SECU consistently operated below the 2.00% target. Over the last 3 years the range has been increased to 3.00% and the target to 2.50% - because SECU had begun to operate consistently above the Board target. That's the reason for the "just move the goal posts" critique.
Here's how the expense dollars play out. SECU 2024 earnings were @ $2.5 billion of which @ $1.2 billion goes to operating expense, @$1 billion to interest paid on member savings, and @$300 million to reserves. As normal with most credit unions, the majority of operating costs is for salaries/benefits - at @$775 million or @65/70% of total operating costs.
😎 This is the so far unexplainable question for the SECU Board. At December, 2021 (before "new/new") SECU had 7,179 employees (7031 full-time, 148 p-t) at December, 2023 SECU had 8,331 employees (7784 full-time, 547 p-t).
✅ During this 3-year period, there have been no additional branches/ATMs, no new products nor services, wait times at call centers are up substantially, members seem to feel branch service quality is in decline, assets have remained about the same...
😎 What is going on?
... and more importantly - Quo vadis?
Making it even more suspect is that hundreds if not thousands of the original 7179 have left or been forced out during that time, making the net new even greater than it seems.
ReplyDeleteHow does the capital to assets ratio affect the expense to asset ratio?
ReplyDelete11:57am An unusual question. Everything of course is connected, but generally capital to assets is viewed as a measure of "safety and soundness" - the ability for the CU to weather unexpected adversity . The expense to asset ratio is a measure of management effectiveness and efficiency.
DeleteOne of the greatest weaknesses in the "credit union model" is that a cooperative structure enables "sloppy capital management" by boards and CEOs to go unpunished...which is never the case in the for profit sector.
SECU is overcapitalized to the tune of @ $1.5 billion - yes, billion!. SECU could mail a $500 check today to each and every member and still be well-capitalized- the highest, best capital rating by law!
Would make a great Happy Valentine's card !
11:40 am Believe in any service business, all of us would prefer to deal with a seasoned employee... experience most often does mean greater knowledge and added value.
ReplyDeleteIf lots of experienced employees have left, one would expect a decline in service until newer folks "caught up"...
Well it's up to the Captain to right the ship ...
ReplyDelete