We've been talking about the principal problem with the escalating pace and size of credit union mergers [7/21 post - link]:
In general, the merger agreements approved by the boards of directors of credit unions merging (selling) to other credit unions defy economic reason and are not in the financial best interests of the member-owners - the folks those individual board members are elected to represent.
As such those merger agreements appear to be a clear breach of fiduciary responsibility.
The proposed merger example given in the 7/21 post was between two Massachusetts CUs: Brightbridge CU and AAHRA CU. You'll note that a much better and more financially responsible proposal would be to payout $2k to each of the 6,000 AARHA members in connection with the merger. The AARHA members are appropriately rewarded for the success of their credit union and Brightbridge benefits from an expanded geographic footprint, 6,000 new members, 4 more branches, and gains @$150 million in assets.
Nothing unusual about the proposal - in fact it mimics "the industry standard" for mergers as outlined by the National Credit Union Administration (NCUA).
Many financial speculators and predators will enjoy "a big unearned payday" if merging credit union members - like those at AARHA - continue to receive less than their fair share of the credit union's member equity.
"But the NCUA and State regulators say it's OK?" Do they?
"What does this have to do with our organization [SECU]?"
Well, in case it has slipped your mind the "new/new" at SECU tried - ineptly! - to run a little merger gambit on the folks at Local Government FCU back in 2022. As we all know, it didn't go so well, to say the least.
SECU keeps trying to claim it never happened - "the no formal proposal proposal!"; but it did. Far too much evidence and too many highly reliable witnesses for that truth to be suppressed. Best witness ever is Mr. Maurice Smith, CEO of LGFCU at the time. Take a look: [link] [link].
So, we're left with two possibilities concerning the LGFCU merger proposal: The SECU Board and ELT either 1) knew what they were doing , or 2) didn't. Hope the commenter now understands why this matter applies to SECU. Megalomania or stumble-bumery? Not exactly a confidence inspiring choice.
Using the "Jeopardy formula" from yesterday; in 2022, LGFCU had @$3.5 billion in assets, @$300 million in capital/reserves, and @ 400,000 members. Each LGFCU member had a "member equity" stake of @$750 in the credit union.
SECU seems to have implied to the LGFCU Board: "Give us your credit union for free or else!" Given "that offer", the LGFCU Board rightfully pointed a middle finger at the SECU Board and gave them a Bastogne, Battle of the Bulge reply.
The credit union "Merger Mania" game is being played by hardcore, financial professionals at the national level. It's winner-take-all, fools-come-last with billions of "member equity" dollars up for grabs. Credit union members are, and will continue to be "put-in-play" - presented with "offers" which they should refuse.
Whether the SECU Board and ELT don't have a clue or just play poorly is a high risk problem for SECU members, as the tsunami of mergers continues to roll in. Is the Board's commitment spelled out in "Our Strategic Plan"? Nah, nothing of substance is...
😎 BTW, if LGFCU members had been given the choice to each receive a "member equity check" of $750 bucks and move over to SECU, how do you think the vote would have come out?