SECU - Seducing Realtors With A Piece Of the Pie? Not Likely....

 

😎 [Here we go again!] From a local realtor: "State Employees' Credit Union stopped by and left information on their products and an apple pie – come get you some!!"  

We haven't had much time to talk about that wonderfully wasteful, half-baked SECU "Media and Rebranding campaign"!  Remember that famous "Superbowl Ad" which vanished like an amateur magic trick back in February - first you'll see it, then you won't!?  Well, the "Ad campaign" is still around bleeding member dollars, although with - admittedly! - very measurable, tangible results, at least in the rebranding effort! Any way you slice it, SECU has definitely been "rebranded" in the minds of many North Carolinians over the last two years. Many no longer think of SECU as a "Mom and apple pie" institution.

"Advertising expenses" over the last 4 months were $2,144,000 or @$500,000 a month - that's a lot of apple pies! 

Other folks would like a piece of that pie, too! Employees, according to the comments, might prefer to see those millions go toward the recently eliminated Xmas bonus or SECU members might like to see a big boost in the MMSA rate from 1.1% to 1.2%! 

😎 What do realtors (and SECU members!) want most from the Credit Union? From my experience, a fair rate and a really quick "Yes!" approval ... not another "pie-in-the sky" - "industry standard" - mediocre,  marketing deep disher .

... but gotta admit, Apple Pie would be a good core value for SECU!

SECU - October, 2023 Financials - The Deposit Dilemma

  

SECU attracts member deposits in a variety of ways, but the 4 largest savings categories are: 1) Money Market Accounts (MMSA) - $16.4 billion, 2) Certificates of Deposit (CDs) - $9.9 billion, 3) Share accounts - $6.8 billion, and 4) Individual Retirement Accounts (IRAs) - $3.4 billion - a total of $36.5 billion. Throw in checking balances ($6.8 billion) and these 5 accounts equal over 96% of total ($44.7 billion) SECU deposits. Take a look:

 

SECU - October, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Let's  not worry about the checking account balances for a moment, since most of us aren't too concerned about the rate (0.05%) earned on that account. And acknowledge that SECU is valiantly trying to be market competitive with short term CDs - with good results, increasing balances by $5.7 billion over the last year. 

The deposit dilemma - and risk exposure - lies with the other 3 types of accounts: MMSA - rate 1.1%,  Shares - rate 0.25%, and IRAs - rate 2.25%.  SECU has $26.6 billion in member deposits earning @1.00% - in a "5% market rate world". Those 3 accounts have declined by $8.7 billion over the last year. You will also note that every other type of savings account on the list (with one very small (HSA) exception) has also declined. Overall additional member savings withdrawals were down another $140 million in October alone - maintaining an unbroken string of continuous decline in 2023.

Will the decline in deposits continue into 2024? Do you think interest rates will come down significantly with a projected Fed budget deficit of $2 trillion in 2024 alone? Will inflation decline much, will prices at Food Lion stop rising, will employees quit demanding wage increases to keep up? Do you believe in the "Tooth Fairy"?

SECU can mitigate this risk by selling its treasury security portfolio and reinvesting those funds (currently earning @ 1%) into current rate investments earning @ 5%...and begin immediately paying SECU members much more competitive rates on their SECU savings. 

Why wouldn't the SECU Board "do the right thing"? Probably because the Board is incorrectly listening to its nouveau "for-profit mentality" leadership team, who would view such a move as "a loss of profits". Well, if it's a "loss" which of the member-owners lose? Name just one! You can't!

Restructuring the portfolio to 1) eliminate the safety and soundness risk of further deposit losses, and 2) reinvesting to boost earnings immediately to raise member savings rates is the correct course for a not-for-profit cooperative Board.

It's simply a redistribution of prior earnings to the member-owners in a credit union. The capital reserves, member equity, retained earnings - whatever you would like to call it - of SECU belong to the members and are held to be used in unusual economic circumstances like we confront today. Why else would you be holding the reserves?  

Let the Neanderthal "for-profiteers" think as they wish - as shallow as that may be! In the not-for-profit, member-owned credit union world, the SECU Board should only be focusing on SECU "Members First"!.

... unfortunately I think they'll "bet the ranch" and go with the "Tooth Fairy".