The P-u-r-r-fidy of Credit Union Mergers
... a malignancy of malpractice, metastasizing into mafioso malfeasance.
We've spent much time looking at the onslaught of mergers within the credit union movement. Been using the proposed SAFE/BECU merger as an example to illustrate and quantify the issues. The SAFE/BECU merger proposal is neither unique, nor exceptional. That CU management and Boards win big in mergers, while credit union members-owners lose out is now common practice.
If you're late to the game, "The Godfather Mergers" series has been reorganized so you can click here [link] and page through, beginning at Part I. (Click "Newer Post" at the bottom left of each "Part" to see the next one).
You may also like to take a look at the parody on the Warner Brothers/Paramount intense, "shareholders'-interests-always-come-first", real world merger struggle [link] to understand how financially negligent credit union mergers have become. Credit union members are being bilked out of billions in shareholder equity - that's billions $$$ with a large "B"!
Would like to add one more comparison to emphasize how malevolent the credit union merger process has become. The following anonymous blog comment epitomizes the bizarre economic logic underlying current credit union mergers:
✔ Anonymous December 8, 2025 at 7:31 AM
"Credit unions don’t sell themselves like you sell a house. There is no consideration in CU mergers. Advocating for competitive bid processes is harmful to the system. "
✅ Say what? Why would selling a credit union to an acquiring credit union be "harmful to the system"? Just who/what is "the system"? Do the interests of "the system" override the ownership interests of the merging credit union's shareholders? Really?
✅ Here's an intriguing question for your consideration. Credit Unions nationwide are not only acquiring fellow credit unions, but are also buying commercial banks in great numbers [link]:
✔ Q: "Do credit unions who buy commercial banks, pay bank shareholders for the value of the assets and equity of the bank?"
A: Would any bank board of directors ever consider "giving away" their shareholders equity - what an insanely silly, illegal, economic idea!
😎 Why does the board of directors of SAFE credit union - or any credit union for that matter - believe they can giveaway a $4 billion financial institution worth between $400 to $800 million [link], without compensating the member-owners?
Are you a member of these credit unions that are losing out on the payouts you propose?
ReplyDelete5:03pm Does it make a difference? Why?
DeleteYes it does matter because if you are a member, then you are advocating for your own personal interest.
Delete5:30pm Not sure I understand. Should members of a credit union be allowed to advocate for their "personal interests"? If not who should?
DeleteAbsolutely they should. However disclosing a personal financial interest when advocating is generally considered the ethical thing to do.
DeleteHope you got that. Happy to have my 12 year old kid draw it out in crayons if not.
Delete12:32/12:09 pm If this is about my "personal interest" in SAFE/BECU, I have none in either.
DeleteBut with open membership, I can certainty open join both if that will make the situation better.
Remember, a large part of featuring this merger as an example is that ALL SAFE members can currently join BECU for "free" if it's in their "personal interest"; and at the same time, keep their own local credit union operating; while also keeping their existing "personal interest" in those $400 million+ in SAFE's reserves.
Sorry to hear your 12 year old is still working with crayons...
12:45 My 4 year old says that SAFE members don’t lose the interest in their 400 million equity when they merge....
Delete1:03 pm Well, clearly you feel your 4 year old is qualified to sit on some west coast credit union boards of directors... won't argue with you on that one!
Delete12:32pm No Mess!!!!
Deletehttps://www.crayola.com/products/color-wonder/color-wonder-mess-free-trolls-world-tour-coloring-pages-markers-757117
Unless. Navy “buys” us, all this hyperbole and drama about billions at stake from acquired side has no relevance to SECU whatsoever.
Delete9:15am Sorry that is just not true - you don't understand the financial mechanics of a credit union merger/acquisition.
DeleteIn our example of SAFE/BECU, it could just as easily be SAFE at $4 billion acuiring BECU at $29 billion. That's afact... and demonstrates ythe financial absurdity of current credit union economics.
Might look at Part XI.. and you'll find that a $100 millio California credy union could acquire SAFE and replace a bpard and CEO who admit they-re no longer up to the challenge.
SECU could be acquired by many NC-based credit unions... Coastal for example, Truliant , Summit, WEYCO... any solidly run credit union.
That "size does not matter" is not a joke with credit union mergers!
I do understand the financial mechanics. CU mergers are balance sheet combos, not buy/sell with consideration. Capital, after a mark to market of A&L of the merged credit union, is combined, not lost.
DeleteI also know enough to know you are correct. In each cu deal, a merged and surviving or continuing cu must be designated. A smaller CU can be the surving cu. A charter distinction, though. Doesn’t mean the surviving smaller cu ELT and board will be in charge - those a part of negotiated terms.
Think about it in reality, though. Let’s say SAFE was the surviving CU. New CU will be called SAFE, CA HQ, BECU gets one board seat, and they retain one BECU ELT. Think BECU board approves that? Think members vote for it? Think regulators will approve that?
Appreciate your points of what’s legally possible versus viable. Both your scenarios, of 100% of a merged cu capital being paid out and a huge CU being merged into a CU 1/10 its size, a so incredibly far-fetched and disconnected from reality they won’t happen, Also would depend on pure negligence, stupidity and breaches of duty by groups large and small.
BTW, if SAFE acquired BECU where does BECU’s capital go? Fleeced from BECU’s 1.6 million members and given to SAFE’s members?
"... the interests of "the system" override the ownership interests of the merging credit union's (members) ...
ReplyDeleteThat is exactly how they see it ... and then they'll say, 'y'all voted us in to run this joint didn't ya?' Like that gives em the right to pilfer the money ...
'There are none so blind as those who will not see. The most deluded people are those who choose to ignore what they already know.'
ReplyDeleteJohn Heywood