Credit Unions: The Godfather Mergers -Part VII

  

   "I know it’s wrong, but I don’t care.” - M. Corleone **

 "Where can you find an acquiring credit union, which will take another one on with no capital?"

 

Forget those ideals of cooperative principles, "people helping people", local member-ownership and control; our troll is obviously clueless about the core economic worth of a credit union.  Unfortunately, credit union boards also appear to be deeply in the dark. At least one hopes it's ignorance, not cupidity. 

 

Everyone selling a business seeks to determine "what it is worth", a fair price, a fair value. An owner wants best value, folks like the IRS want their share too.

 

Valuation of a credit union as a business is straightforward, since the assets and liabilities are pretty uniform (loans, investments, some buildings and equipment, member deposits, and reserves). 

 

Credit unions are also heavily scrutinized by both regulators and CPAs to assure that financial statements reflect a fair representation of the approximate value of each holding. Both loans and investments are regularly adjusted to reflect potential losses in value. If everyone is doing their job, when looking at a credit union balance sheet; for the most part, "what you see is what you get" in terms of "book value" of the institution.  

 

The formula for the "book value" of SAFE CU - if the Board were selling it rather than giving it away - is Assets (loans, investments, buildings, etc) minus Liabilities (member deposits, CDs, IRAs, etc) equals Equity (also referred to as book value, net worth, reserves, or capital).  A-L=E!

 

For SAFE that would be (A) $4.4 billion in loans/investments minus (L) $4 billion in member deposits = (E) $400 million in equity/reserves which is owned by SAFE members - and available for distribution (@%1,639 per member).

 

😎 ' Course that only applies if the SAFE CU Board chose to sell the credit union, not give the members' equity/reserves away. 

 Last time I checked, credit unions were classified as not-for-profits, not charities... $400 million is a large gift of other people's money! 

 

  

What "Time" Is It At CIVIC FCU?

😎 On October 10, 2025, I received an unsolicited email from CIVIC FCU (of which I am a member) to participate in a virtual "Local Connect" meeting with the "big-dawgs"...

 

   

😎 So I signed up for today's October 14th meeting at 11:30 a.m., eager to hear...

  

😎 Still waiting....  

   "You time was valuable."

 

 

 

Need A CIVIC's Lesson? Two Opportunities...

  ... to learn more.

As noted yesterday [link], Local Government/CIVIC FCU is still a topic of high interest among SECU members.  The move of LGFCU to the new "CIVIC" name and "independence" in June, 2025  remains a major legacy of the "new/new" culture at SECU.** 

The flight by CIVIC from the 40-year partnership with SECU was a complex, difficult task. Everyone is hoping for success; @ 400,000 CIVIC members in North Carolina have got their fingers crossed.

✅  Chip Filson is a long-term credit union advocate, having served as a state/NCUA regulator, data guru on CUs, and as an insightful commenter/blogger on all things cooperative.  Filson's blog: "Just a Member" featured one take on CIVIC yesterday. Worth a read [link]! 

✅  The second opportunity to learn more about CIVIC is to sign on to its two scheduled "Local Connect" online meetings with top brass at the Credit Union:

"Fall virtual meetings: Tuesday, October 14 and Thursday, November 6. All virtual meetings are from 11:30 a.m. – 1:30 p.m."

[Local in-person meetings are available too! Sign up here: [link]

"What to expect
The Civic leadership team will share valuable updates about recent challenges and solutions, digital how-to tips, and other information about moving forward together. Most important, you can ask questions about what matters most to you." 

 

😎 What an innovative idea to allow member-owners to participate and ask questions! 

 

   ** ... that old "new/new" nose-grower - "the no formal proposal proposal" - is now playing out!

 

 

Wrestling With Alligators: LGFCU Makes The Transition To CIVIC...

   I got this!

As you know, Local Government Credit Union ventured out into deep water in June with the transition to a new independent model - CIVIC FCU.  Everyone held their breath, this was no easy task,

The short-term concern was whether the data/tech conversion of 400,000 member accounts could be effectively managed. Problems are the rule, not the exception in such complex efforts. CIVIC seems to have gotten across that bridge in pretty good order. There were some snafus; and member service complaints soared as "wait times" in the contact centers became measured in hours. That "white-knuckler" hopefully has passed.

The longer-term question is how well CIVIC will fare having abandoned the 275 local branch structure of SECU in favor of the new, " all (almost!) digital" format.  Full automation/all digital can be more efficient and perhaps less costly as long as there are no "problems". Unfortunately,... members encounter lots of problems with their finances. Stuff just happens - to all of us. 

The experienced, local branch staff has long been recognized as the key to the "highest in nation" service quality ratings SECU received. Local staff were authorized to act "to fix the problems", "make the exception" - on the spot. They were hired to listen, decide how to make it right, and even  knew how to be humble and apologize! Members knew they had an ally - and an advocate! - when a problem occurred. 

Hard to match that with an algorithm, especially after waiting 30 minutes on hold!  SECU experienced a similar collapse in service with the centralization of '"loan decisioning" and collections two years ago - the elevated, multi-million dollar losses in delinquency and charge-offs have yet to recover.

✅ Will be interesting to watch "the service quality" barometer at CIVIC going forward. For now, from the June 30 regulatory reports, here are some "first indicators" on CIVIC:

Assets: Have dropped from over $4 billion to $3.66 billion.

Deposits: Have declined by @$500 million to less than $3 billion, despite good rates.

Loans: Dropped by over $200 million in the last quarter; delinquency is up to @5%.

Membership: Peaked at 407,000 and has now declined to 381,000.

Expenses: Up substantially, as might be expected with the transition.

Net Income: Operating in the red for the last 3 quarters, capital remains strong. 

😎  Anyone can "go digital"! In the future, comparing the success of CIVIC vs SECU may be a strong signal as to the value of that SECU branch network.

How important do you think that local branch service is to the SECU membership?

 

  Is CIVIC "up a tree"... with no branches? 

 

SECU Has Already Misplayed The Jeopardy Game With CIVIC...

  A Little Muscle or Gymnauseum?

✅ Commenter on 7/21 Jeopardy post [link]: Anonymous July 21, 2025 at 11:33 AM

           "What does this have to do with our organization [SECU]?"

Well, in case it has slipped your mind the "new/new" at SECU tried - ineptly! - to run a little merger gambit on the folks at Local Government FCU back in 2022. As we all know, it didn't go so well, to say the least. 

SECU keeps trying to claim it never happened - "the no formal proposal proposal!"; but it did. Far too much evidence and too many highly reliable witnesses for that truth to be suppressed. Best witness ever is Mr. Maurice Smith, CEO of LGFCU at the time. Take a look:  [link]  [link].

So, we're left with two possibilities concerning the LGFCU merger proposal: The SECU Board and ELT either 1) knew what they were doing , or 2) didn't. Hope the commenter now understands why this matter applies to SECU. Megalomania or stumble-bumery? Not exactly a confidence inspiring choice.

Using the "Jeopardy formula" from yesterday; in 2022, LGFCU had @$3.5 billion in assets, @$300 million in capital/reserves, and @ 400,000 members. Each LGFCU member had a "member equity" stake of @$750 in the credit union.

SECU seems to have implied to the LGFCU Board: "Give us your credit union for free or else!" Given "that offer", the LGFCU Board rightfully pointed a middle finger at the SECU Board and gave them a Bastogne, Battle of the Bulge reply.

The credit union "Merger Mania" game is being played by hardcore, financial professionals at the national level. It's winner-take-all, fools-come-last with billions of "member equity" dollars up for grabs. Credit union members are, and will continue to be "put-in-play" - presented with "offers" which they should refuse.

Whether the SECU Board and ELT don't have a clue or just play poorly is a high risk problem for SECU members, as the tsunami of mergers continues to roll in. Is the Board's commitment spelled out in "Our Strategic Plan"? Nah, nothing of substance is...

😎 BTW, if LGFCU members had been given the choice to each receive a "member equity check" of $750 bucks and move over to SECU, how do you think the vote would have come out? 

  Particularly given this [link]... 

The "Rewards Game": CIVIC Style - A little Nothing For Something!

Wasn't really intending to wade back into the SECU rewards card debate. Was looking at the most recent "Independence Day" email from CIVIC FCU (yes, I am a member - see anyone can join!), when that new "6% cash back" card offer popped up from Bank of America [link]. 

CIVIC's "upgrade" pitch seemed to confirm the suspicion that the 60/70% of LGFCU members carrying a balance will be "steered" out of the low-rate Classic credit card into the new rewards offering. The "rewards card" interest rate at both CIVIC and SECU will be 3% higher (that's a +25% rate increase ).

   

            ... "upgrading" to 18%?

❋ Quote: "Consider upgrading from a Classic Credit Card to the Rewards
Credit Card, with no cash advance, annual, or balance transfer fees."

So lets set the benchmark also for CIVIC FCU to measure future success. At 3/31/2025 CIVIC had 43,230 credit card holders with balances of $145.5 million.

😎 By the way, remember the post about CIVIC now offering better across the board savings rates than SECU [link]?  While looking at the email, noticed that CIVIC has now also posted lower rates than SECU on most loans - autos, credit card, personal.

🎆🎆🎆 Prepare for the fireworks come "Independence Day"! 

 

  "Virtue has its own rewards, but doesn't sell at the box office!" - Mae West