A Little Muscle or Gymnauseum?
✅ Commenter on 7/21 Jeopardy post [link]: Anonymous July 21, 2025 at 11:33 AM
Tuesday, July 22, 2025
Monday, July 21, 2025
National Merger Mania: CU Boards Playing Final Jeopardy Wth Fiduciary Responsibility... Misappropriation #6
"Alex, I'll pick..."CU Member Equity"... for $2,000."
We've been talking about the escalating commercialization of credit unions on both the state and national level... and how credit union members stand an almost guaranteed chance of "getting fleeced"- if history is a reasonable guide.
Been using SECU for examples, but lets switch to a recently announced merger proposal in Massachusetts [link], for a real-life example and let you determine "What's best?"
The two CUs involved are Brightbridge CU [link] and AARHA CU [link]. Both look like fine CUs, run by fine folks, no apparent problems.
Brightbridge is located mostly in eastern Mass, has @$2.2 billion in assets, 19 branches and is very well-capitalized at @10% [to be "well-capitalized" by federal law, a CU must have capital/reserves > 7%]. AARHA - has been around since 1929! - serves mainly western Mass, has @$152 million in assets, 4 branches, and is also well-capitalized at @8.5%.
Brightbridge ia the acquiring credit union, which usually means - at least at first - nothing much will change for AARHA members except the sign on the door. Accounts, rates, loans, checking, etc all just switch over to Brightbridge data systems.
✳ Here's the catch! AARHA CU has only @6,000 members and since 1929 has accumulated over $12 million in capital/reserves - that member equity belongs to each and every AARHA member!
✅ The AARHA Board of Directors has two possible ways to complete this merger "on behalf of AARHA member-owners":
1) Just give AARHA CU to Brightbridge - including the $30 million in cash/investments, $100 million in high performing loans, all those branches and account relationships .... and $12 million in member equity.
or
2) Just give AARHA CU to Brightbridge - including the $30 million in cash/investments, $100 million in high performing loans, all those branches and account relationships .... and send each of the current 6,000 AARHA members a "member equity" check for $2,000 (total $12 million).
😎 Brightbridge gets a "free credit union" either way [and remains "well-capitalized"!], so you know how those folks will vote.
😎 How would you vote if you were an AARHA member? What if the AARHA Board didn't let you vote on those two choices?
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"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?