A $400 million sucker punch?
✅ In response to the "$400 Million And No Toaster?" post [link], even our troll community seems a bit perplexed about the BECU/SAFE "mega-me-me" merger!
*This isn't a good deal for SAFE members, but not for he reasons stated. Their capital isn't going away. BECU has basically flat-lined on deposit and asset growth in the last few years, and they're not very profitable, despite being focused on profit. Their high operational expense ("Opex") ratio is 3.43% and rising; SAFE is 3.13% and declining. This is a scale and net income play for BECU. They'll have to hack expenses a lot get that horrible Opex down. And, their rates aren't great:
SAFE new auto, 5.19%, BECU 5.49%
SAFE used auto, 5.29%, BECU, 5.79%
SAFE HELOC, 6.75%, BECU HELOC, 6.99%
SAFE Personal loan, 9.04%, BECU 9.99% etc, etc..
SAFE 24 mo CD: 3%; BECU 2.23%
SAFE 12 and 18 CD: 2.55%; BECU 2.37% ...it goes on and on.*
😎 So, according to our troll-confirmed, NCUA financial data: BECU has higher operating costs, worse interest rates, and a slower growth rate than SAFE credit union!?!
😎 But the CEOs are cooing otherwise...
That's a we think you are an idiot video
ReplyDeleteI thought that video was giving me goosebumps. Turned out, it was just a rash.
ReplyDeleteSAFE members won’t lose their capital, but they will lose control over strategy, pricing and capital investments, etc. Seems like BECU members might rather they use their capital for better rates than to absorb a smaller CU way outside of their footprint.
ReplyDelete7:56am This issue keeps coming up. Let me try to make the distinction again.
DeleteIn the example, if the BECU/SAFE merger is approved as a "giveaway"; the commenter is correct SAFE members' will not lose their capital.
SAFE's charter will be cancelled and it will cease to exist. The members' $400+ million in capital/equity will be transferred to BECU, beyond the control of California.
As a new BECU member, ex-SAFE members do retain ownership rights in all the equity/capital of BECU ...so again the commenter is correct...SAFE members didn't "lose their capital".
But... there's always a but isn't there...All SAFE members have a better choice than to have their $400 million simply transferred over to BECU.
1) Each SAFE member could join BECU for free today if they need to do so and 2) then ask the SAFE board to request proposals from other CUs interested in a merger/purchase of SAFE.
There would be many offers from other CUs, as SAFE is a strong, thriving business.The potential payout to SAFE members could easily exceed @$1,600+ per member (the $400+ million divided among the member-owners).
Shouldn't the SAFE board negotiate the best deal available on behalf of SAFE members? Is the BECU giveaway the best deal available? How does the SAFE Board know?
Which would you choose as a member? Receive $1,600+ today in cash or transfer it to BECU and probably never receive it?
Easy to guess how the majority of SAFE members would vote ... but hey why not ask them?
Two considerations.. 1) they can’t get more than the net value of the equity, or more than the 1,600. There is no bidding or buying in cu mergers. SAFE can’t get more $$ from another CU, but they can find a better partner.
Delete2) SAFE members would most assuredly vote that way if asked. Now SAFE board has to find a CU willing to take them on with no capital with it, or just dissolve
DeleteSo not a Safe choice until they find a CU that has the capital and stupidity to take teens like that.
Delete11:39am Missed on 1)... you absolutely can get more than the net equity book value for a credit union. Suggest a reread of the blog post noted below... or if you haven't been following the WB/Netflix bidding war , take a look.
DeleteIn the real world thriving businesses always sell for more than the stated equity - with SAFE that's more than $400 million+++.
Credit union owners deserve to get full value for the credit union they own.With the BECU "deal" they definitely aren't.Why pay $400million for something you can get for free?
That doesn't compute in the real business world.
Banks are selling for 2x capital in California, why would the SAFE board give an institution away?
https://www.secujustasking.com/2025/12/credit-unions-godfather-mergers-part-ix.html
2:01... well that's the point you fundamentally don't get or acknowledge. Public companies can do hostile takeovers and buy shares on the to open market, and literally get the best price per share. Not how it works in CU's. There is no stock, nothing to purchase, and no cash trades hands in CU members. You can say banks trade at 2x all you want, but that's irrelevant to a CU. You talk about the real world, but not the CU world. Literally, are saying BECU or some other CU could write SAFE a check for $600 million? Who would it go to? There are no shareholders.
DeleteSo please explain how a credit can, or ever has, "get" more than the net equity book of their credit union, from another credit union.
11:42am Glad we agree that SAFE members, if given a fair choice, would overwhelming vote to receive the cash for their ownership rights.
DeleteCan also assure you that if the SAFE Board did what was fiduciarily responsible and requested other offers from credit unions, many would be received. Costs little to find out and may save litigation costs.
Think many knowledgeable SAFE members would agree with your comment " they can find a better partner."
You’re didgibg the main point about the $$. You’re right, SAFE could find a better partner, negotiate more board seats, keep their name, etc. what they can’t and won’t find is someone will to “pay”above their net book value. That’s not how cu mergers work.
Delete6:33pm Neer been called a "didgibg" before! Not sure what it means, so not sure how offended to be. Big didgibg or little didgibig?
DeleteSeems you view the proposed merger to be a bad deal all the way around (A big didgibg for SAFE members and maybe even a little didgibig for members at BECU ?)
As to the money, you're missing the overall point, which is the "business value" of a credit union.
Try this: 1) Is a credit union a business? 2) Does it have a "market value"? Believe the answer to both is a resounding "yes. Would be nonsensical to claim otherwise.
If you think paying members "above book value" for their credit union is unreasonable, let's offer to pay "way below book value" - but not give it away!
Give each SAFE member $250 to vote to keep the credit union exactly as is, except of course with a new governance/leadership team. Do you think the membership of SAFE would go for it?
Sure they would and even after paying out @$62 million to members the credit union would remain well-capitalized, safe and sound.
The marketing panache would be spectacular!
.
So let’s say BECU pays SAFE 600 million to acquire them, because banks that buy other banks set the market at that price. Can you explain the accounting of that? Who gets that 600 million?
DeleteA credit union is a business, and a value can be placed on it, including a net equity value. Where your logic breaks down is that there is not a market or platform to buy and sell credit unions.
Delete8:44 am Simply not true. There is a very active market for credit union branches and equipment, for credit union loans of all types, for credit union investments of all types, and even a market for member accounts/deposits.
DeleteYou can read about these type transactions occuring every week whether branch, loan, investments.
Do appreciate you confirming for readers that: "A credit union is a business, and a value can be placed on it."
Credit unions are commercial businesses, have a quantifiable market value, have shareholders with a vested interest, and can be sold in whole are part.
8:08am Don't get hung up on any specific price.
DeleteYou've confirmed that SAFE is a commercial business with a market value and that BECU is a ready, willing, sophisticated buyer - sounds like an "arm's length" transaction, all Kosher from a business perspective.
The transaction would be treated the same as the purchase of a bank by a credit union... that seems to be happening almost weekly these days. The CPAs are well-prepared to account for the transaction.
Not sure why there would be any doubt about who would get the purchase price? Kind of a stunning question!
The owners of SAFE credit union - THE MEMBERS - would receive the purchase price... in cash!
Just wrong. Now credit unions have shareholders?
Delete10:37am Yes, shareholders. Always thought that was true according to stat/federal law and charter/bylaws
DeleteDo you have a reason to believe that credit unions do not have shareholders?
Then why do credit unions call them "share" accounts?
That is a legit issue in mergers, that acquiring CU members don’t get to vote, and there are all kinds of reasons this could be bad for BECU members, too. Given our size, we would be an “acquirer” and it’s right that both CU memberships should get to vote. So appreciate that the concern on this blog is for merged CU’s, but as an SECU member I wouldn’t want our money used to merge with some CU in Texas or something, and we should get a say in that.
ReplyDelete"...we should get a say in that."
DeleteGood luck with that ...
"I wouldn’t want our money used to merge with some CU in Texas or something, and we should get a say in that."
Delete"We'll let you know what you need to know, when you need to know it!"
I read in CU times that Washington state passed a bill that would require credit unions to pay taxes if they acquire a bank. No wonder Boeing did a merger with a CU that is strategically and geographically random. When you haven’t grown your own assets in 3 years, this sure looks like growth for growth’s sake. Why wouldn’t other WA CU’s be willing to merge with them?
Delete9:54am Haven't heard of that law. Can you provide cite?
Delete1:46pm https://www.cutoday.info/Fresh-Today/Washington-Bill-Threatens-To-Curb-Credit-Union-Acquisitions-Of-Banks-In-Evergreen-State
DeleteA co-worker of mine met one of BECU senior leaders at a conference, and heard that their General Counsel, Chief Audit Officer and Chief Risk Officer left. Red flag, perhaps? And they lost their EVP over their business areas, and their EVP of Community, all of them on their own volition, all within the last year. This person went on to say their employee survey results and things like Glassdoor ratings and comments are declining a lot too..Those aren’t the little tidbits that will be part of required merger disclosures that SAFE members will use to inform their vote, so hopefully they have done their due diligence.
ReplyDeleteBECU has apparently lost its way and SAFE is so small they’re going to blow them up, fire hundreds of people, and then try to squeeze profit out of them to fix their own issues.
Delete11:44 Seem to be strong financially.Never one much to put full faith in glassdoor, yelp, etc... trolls hae been known... well, y'know.
DeleteI feel their sincerity
ReplyDeleteThey have yet to answer the question: how will this benefit SAFE members? Seems like they are losing in the deal. This is even on top of the larger question of whether or not mergers are good for members (they usually aren’t).
ReplyDeleteThe video said they will get new products like first time hone buyer grants and so aromatic loan reprice, whatever that is. Certainly two things SAFE could choose to do for their members now if the wanted to. This merger seems in no way good for SAFE members. Or BECU members, for that matter.
Delete2:07pm "You can say banks trade at 2x all you want, but that's irrelevant to a CU. You talk about the real world, but not the CU world."
ReplyDeleteThe CU world is not the real world? Only fools and narcissistic CU CEOs leading unreal mergers believe that.
disgusting leaders