Credit Unions: Godfather Mergers - Part XIII

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?

 Cat's out of the bag on CU mergers. They are clearly malignant and rapidly metastasizing... and unfortunately this catastrophe has at least nine lies! 

About Those SECU Board Approved 2025 "No Amendment Amendments"...

  

              Caught?  Blue handed.... 

                         [link] 

  Monstrous or just half-baked?

"I can't believe what you say, because I see what you do." - James Baldwin  

 

As SECU Seeks To Be Little More Than "Industry Standard" And Pursues Commercial Lending, Questions Will Arise...

... state of the "movement"?

Current "Industry Standard":

✅ "Credit union acquisitions of banks surged to record levels, with 22 announced acquisitions in 2024, representing more than $11 billion in bank assets potentially lost. Ten of these deals crossed state lines. Credit unions are effectively “weaponizing” their tax subsidy and lax regulatory standards."

✅ "Credit unions used their tax exemption to avoid paying nearly $4 billion in federal income taxes in 2024 while holding $2.2 trillion in tax-free assets. The 450 credit unions with $1 billion or more in assets represent 80 percent of the industry’s assets but comprise only 10 percent of the total number of credit unions."

✅ “The non-profit co-operative spirit and mission of credit unions is being threatened by a handful of . . . vanity projects like stadium naming-rights deals”.  The example is Frontwave Credit Union, a credit union that serves Marine recruits in California, which purchased the naming rights to a soccer sports-and-entertainment complex in 2022."

“Explain to me how a grunt Marine at Fort Pendleton, who is a Frontwave Credit Union member, is benefiting from their multi-million dollar stadium naming-rights deal as opposed to reducing their overdraft fees or lowering their credit card rate.”

😎 Well, at least we can be thankful that the SECU Board hasn't wasted SECU members' money on 1) bank buys, 2) ego-mergers, or a 3) naming rights fiasco...

SECU Business/Commercial Lending - Going Whole Hawg?

   or "We, We, We" all the way home?

Interesting how much commentary arises around the topic of business/commercial services at SECU [link]! 

That's good, because SECU members realize that this new endeavor for the credit union is a complex service, in which the Board and executive leadership have no expertise nor experience.  The question being asked: "Has the prudent due diligence been done on this service?" [Doesn't appear so!]

But, before you jump to the wrong conclusion, basic financial services for small, North Carolina, member businesses may be a good thing.  Requests from a few members have always been there; although not offering business/commercial services, certainly hasn't hurt the performance of SECU over the years.

Business/commercial services is an "operational decision" which is rightfully a decision for the current SECU Board. So let it be so! But, hope the Board and ELT will do their homework and not believe the decision shouldn't be subject to questioning by SECU member-owners - who pay for the mistakes and missteps they make.

Pretty obvious that several costly unforced errors have occurred over the last three years. Those faux pas seem to result from "strategic planning" limited in imagination to "everyone is doing it", "me too", and "its industry standard". That won't take SECU into the future... it may assure its failure.

😎 One quick example is the question of: "What is"a small business loan"?"

✅ As you know, the major angst about credit unions within the banking industry centers on the growth in commercial lending.  As you saw in a prior post [link], according to the NCUA, commercial lending by credit unions now exceeds $174 billion, topping both total credit card lending [$85 billion] and total new car lending [$164 billion] - that's all CU card/new car loans for 142 million members! 

😎 Why would the banking industry argue against "small" business loans to help folks "get by" or get started - sounds pretty hard-hearted! But that doesn't appear to be what's going on. Take a look:

✅ Here are the stats on commercial loans at the largest U.S. credit unions as of December, 2024: 

NavyFed          1300 loans   total balances: $820 million   avg. loan amount: $630 thousand

SECU                                               -0-

PenFed              455 loans   total balances:  $1.35 billion   avg. loan amount:  $2.96 million

Boeing               957 loans   total balances:   $3.27 billion   avg. loan amount:  $3.40 million

SchoolsFirst        88 loans   total balances:   $2.33 billion   avg. loan amount:  $ 2.80 million 

😎... not exactly your small engine repair shop, lawn maintenance service, or Ebay start up, is it?

What are the parameters, controls, limits the SECU Board has approved for the upcoming business/commercial services? Why not give members an overview of what and why?

A little transparency won't hurt your image... promise!

 

SECU Board: Business/Commercial Lending - Going For The Gold?

   ... What have we got to lose? 

😎 If a lack of experience and expertise qualifies a credit union to be a business/commercial lender, then SECU should be wildly successful!

If, as it appears, there is a continuing struggle to control delinquency and charge-offs at SECU ; then, what could possibly go wrong with jumping into the more complex world of commercial lending? Well, there might be a few risks - and consequences - case in point:

✅ Two CUs Now Own Former Fruit of The Loom Plant After Loan Goes Bad [link CUDaily]

"Vidalia Mills [Louisiana] owed approximately $32.5 million to Jefferson Financial Credit Union and Greater Nevada Credit Union. At auction the highest bid was $1,005,000, which was lower than the appraised value of $1,193,000."

How did a $600 million credit union - a strong school employee focused credit union (originally Jefferson Parish School Employees) in Louisiana - come to partner with a Nevada credit union to lose $30+ million on a start-up denim plant? Want to know? [link] - read it and weep! 

"Others were more skeptical of the mill housed in the former Fruit of the Loom facility. To be a  fully vertical denim mill with in-house spinning requires a right-sized facility and a knowledgeable workforce at each stage of production, not to mention cash. Pete Roberts, the founder and CEO of Origen USA said. Vidalia lacked it all."[link]

When you lose $30 million bucks "swimming with sharks" in commercial lending waters, well beyond your depth, there are consequences. Especially when your loan loss reserves are only @$6 million and total net worth @ $40 million!  

😎 As you see, all it took - as quoted - was "a board open to progressive thinking" misled by a CEO to match - both evidently of the "We Are" type.

✅ Consequences?:

"The Board of Directors, Leadership Team and Employees of Jefferson Financial FCU are excited to announce that the JFFCU membership successfully approved the merger with Keesler Federal on May 21, 2025."

😎 Translation: Jefferson Parish School Employees Credit Union is burnt toast!  Hubris has its price!

What have we got to lose? Well...  the credit union, perhaps!

Carolinas' Credit Union League Blundering Forward Into Another Type "Desert"?

"H.B. 187 - CU Update Act": Putting N.C. Credit Unions On the Chopping Block?

  ... Shock and Ow-w-w!

😎 Why don't we go ahead and try sticking our finger in an electric outlet also!

✅ We've hashed over the "H.187 - CU Update" bill on several occasions.  Is CCUL's persistence in the best interest of North Carolina's 3 million+ credit union members? Or is it primarily in CCUL's own interest [see link here]? 

  Look out! [link] Washington State – The GoWest Credit Union Association - which is CCUL's counterpart on the left coast - is saying Washington State’s bankers have no reason to celebrate a bill that taxes credit unions that purchase banks in the state. The approved legislation that removes the business and occupation (B&O) tax exemption that state-chartered credit unions currently have in place when acquiring community banks. The tax would be 1.2% of the credit union’s gross income, with supporters of the legislation saying it closes a “tax loophole by making credit unions that acquire banks subject to the same B&O tax as banks.”

Ms. Leigh Brady, CEO of SECU, has publicly stated that being taxed at the federal level would cost SECU members $40 million per year forever - not a minor cost to the membership. With the Washington State business and occupation state tax, the CU tax debate has now also gone "local" - the various state taxation exemptions could be "put in play".

It's been made clear that not all N.C. credit unions support H.187. Why risk a minor "update" in the midst of such great national - and now local - uncertainty [see link on national tax/NCUA]? 

🐪🐪🐪  Beware of Camel Noses: "The term refers to an alleged Arab proverb that if a camel is allowed to get its nose inside of a tent, it will be impossible to prevent the rest of it from entering. A small, seemingly innocuous act - H.187? - or decision that will lead to much larger, more serious, and less desirable consequences down the line." 🐪🐪🐪

$40 million a year... lets hope our local bankers can't read!