Sorry to be so slack!
😎 Was surprised to get chastised by a commenter about not providing info quickly enough. Glad to know the analysis is appreciated!
"Why are you silent on 1Q results? Almost all of your criticism on ELT and Board is "backed up" with results. Now that you can't point to that any more you go silent on them? Here are some highlights to save you time:
"* Annualized deposit growth of 18%, with annualized loan
and membership growth above 5% and 4%, respectively. You will find all
will be well above industry when that data comes out.
* Delinquency dropped $591 million, down 51% from year-end! [There's more if you want to check it out - click above]"...
✅ The past areas of performance concerns have been soaring charge-offs, rising delinquency, and the overall operating costs at SECU under the "new/new".
To start, here are the real data on loan losses - the ratio of charge-offs (CO's) divided by average loans at SECU. The data comes directly from the chief federal regulator of credit unions, the National Credit Union Administration (NCUA). The loan loss ratios are as of December 31 of each year for the last 15 years. You'll note that the NCUA also provides a "Peer ratio", representing the average loan losses at other very large credit unions similar to SECU:
Year-ending SECU CO's Ratio Peer CO's Ratio
2008 .13% .79%
2009 .20% 1.16%
2010 .23% 1.10%
2011 .26% .89%
2012 .29% .71%
2013 .21% .52%
2014 .20% .45%
2015 .26% .42%
2016 .33% .47%
2017 .40% .50%
2018 .45% .48%
2019 .43% .46%
2020 .30% .46%
2021 .20% .19%
2022 .35% .24%
2023 .62% .43%
2024 .68% .59%
2025 (1st qtr) .66% n/a
Red = "new/new": Historically, SECU loan losses never exceeded 1/2 of 1%. SECU members have always been faithful in repaying their loans - which were made, monitored and collected by a well-trained, home-grown, SECU branch-led lending staff.
SECU had never been above "peer average" until "new/new"!
Believe that it is "a bit of a stretch" to say SECU lending "has turned the corner", while still sustaining losses twice the historical average, wouldn't you?
😎 Twice as many losses even though no longer lending to those "n'er do well" , low-tier members!
New math? ... or just "new/new"?
First quarter is exaggerated on deposit growth for most institutions because that's when tax refunds hit accounts. Those balances fade as the year goes on and members use that money. It'll be more impressive if that annualized growth rate holds up by the end of Q2.
ReplyDeleteThose Q1 tax refunds are also used to help bring delinquent accounts current, thus also (temporarily) improving delinquency numbers.
DeleteThis blog is providing an impressive amount of plain, simple facts. Hard to argue with that. I'm seriously starting to wonder whether the board and senior management know what they're doing.
ReplyDeleteMany of us have been wondering that ever since the board hired Jim Hayes. The board has earned the term "rogue board".
Delete3:56 pm Not everybody agrees withe data presented here.
DeleteBest I can see the Board is composed of very bright people. If in fact "they don't know what they are doing", it would be the result of the ELT not giving them complete and accurate information.
A Board can't be any better than the staff leadership, as this Board found out with its disastrous first CEO hire...
Of course the Board may also think it possesses "greater wisdom" about what needs to be done, that seemed to be the failing in that first hire also...
t’s not about agreeing with the data itself. It’s correct and factual. It’s the lie about the peer group, and forming an opinion or judgment on only one data point. You’ve been presented with other accurate data that provides more context and leads to a different conclusion. You provide surface level public data. You’d be amazed at the data and analytics that have been built. The current board sees way more data and analytics than your board saw. Not a criticism, just an evolution of the space, and the right of credit analysis talent.
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