One has to wonder!
✅ In a recent post, we took a look at several financial asset-type comparisons between SAFE and BECU [link]. There appeared to be little compelling reason for SAFE to merge, as it matched or out-performed BECU in almost all respects. The cruncher was that the operating efficiency of SAFE was far superior - being about -35% lower than BECU!
To prove the point further, take a look at how BECU compares to other very large credit union peers in operational performance [according to NCUA - link]! In terms of loans, on average BECU appears to charge members more than peer credit unions while paying members less on their savings.
The difference in what BECU savers earn (overall referred to as an "average cost of funds" in CU regulatory-speak ) is 1.21%, while at large peer CUs their members' "average cost of funds" is 1.73%... about 50% more!
😎 Credit Unions generally quote savings rates in terms of "APY"- Annual Percentage Yield. BECU appears to instead be using "APS" - Ain't Paying Squat!
✅ Why do members of BECU, on average, pay more for loans and earn a whole lot less on savings? Yep. you guessed it! The cost of operating BECU is @+15% higher than all other CU peers!
😎 What in the world was the SAFE Board thinking? Gaining "economies of scale" by merging with a larger, out-of-state credit union?... that looks a bit fishy!
SAFE being sold the story of scale.. Merge with a big CU.. get scale, become more efficient, create value and provide more to invest in growth, technology, products, pricing, etc., etc. Isn't that the line we heard from both CEO's?
ReplyDeleteVery easy to that this deal offers no scale, and very hard to see how SAFE's favorable pricing can be sustained when they got tossed into this massive expense base.