Careful!... or you will definitely get mauled!
Now that you are an expert on "TDR's" [post link] and have an honest understanding of the principal reason SECU's delinquency "dropped $581 million, down 51%!" overnight, lets take one last glance at the remaining, overall delinquency situation at the Credit Union.
Any major TDR adjustment in the hundreds of millions of dollars will make future comparison of delinquency "awkward" at best. Why? Because many loans that were delinquent over the last six months are now "undelinquent", or much less so. The goalposts have moved a bit!
So, what do you do? You increase your focus on the 3+ month (90+ days) delinquency totals, rather than tracking the 60+ day delinquency totals. Why? Because while TDR adjustments make many 30, 60, 90 day delinquent loans "undelinquent"; TDRs generally do not greatly impact the 90+ days delinquent accounts.
A commenter indirectly pointed this out yesterday by noting that according to the SECU's website financial summary [link], 3+ month delinquency had increased from 1.11% in March, 2024 to 1.39% in March, 2025. Note that the increase in 3+moth delinquency to 1.39% is after the large TDR adjustment.
✅ What do those "%s" mean in real dollars? The 3+ month delinquency at SECU has increased from $376 million in March, 2024 to $495 million in March, 2025. That's an increase of +32%. During the same period, outstanding loans increased by only 6%.
😎 The 3+ month delinquency level of $495 million is an excellent "leading indicator" of future SECU loan losses over the next two years.
SECU is making a substantially larger number of bad loan decisions than in the past. The SECU Board should address the problem.
Or should SECU members be expected to just grin and bear it?
Sincere question... Do you believe that all delinquent or charged-off loans are the result of a bad decision at the point of origination?
ReplyDelete1:22pm No, "unexpected, real life events" do often happen to good people which will damage their ability to repay. That's why TDR's can be a positive help.
ReplyDeleteQuestion: Usually an "unexpected real life event" - whether Hurricane Helene, messy divorce, job loss, health issue or breadwinner death - will severely damage a person's credit score. Do you believe that charging these good people a higher rate (or not lending to them at all) because of a lower credit score caused by an "unexpected, real life event" is fair, justified?
Yes, it is justified. So yes the rate is higher than an A tier with perfect credit, but it can still be a fair rate and below market.
Delete2:04pm And the reason it is "justified"?
DeleteThere was a time when I believe you would not have been qualified to work at a credit union - no heart. But perhaps times have changed.
Good luck in life.
it's all about the 'profit' don't cha know ...
DeleteYour statement of SECU making a larger number of bad decisions is categorically false and not supported by these numbers.
ReplyDelete1:35pm The rising delinquency and losses are supported by the numbers, your opinion isn't.
ReplyDeleteHeard through the grapevine recently that “new/new” has come to the realization that no one does collections like the branches. So all consumer collections will be coming back to the branch after “Civic day”
ReplyDeleteMaybe this is to help justify staffing levels in the branches
DeleteIf we get rid of 20% of the branch staff then no more bad loans, right?
Delete@ 6:15a - I hear this argument from time to time that branches are "overstaffed" or have alot of "down time". Usually comes from someone who has never worked in a branch or has worked internally for many years. Fair warning, if you make this statement out loud around others, you will quickly show them how little you know about the organization.
Delete@11:36 - This is not the case everywhere, but I have been to several branches recently where I was the only member in the building while I saw multiple employees on cell phones. On the other hand, there are branches where it is very busy. It really depends on the branch.
Delete11:36. So says the branch person that retirements the huge liability for the org. Some branches get busy on pay days. Otherwise they are are expense hemorrhage from people that Maher bad loans and surf the internet most of the day.
Delete