"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?
