Credit Unions: The Godfather Mergers - Part II

  “Finance is a gun... ” 

  Comment on "The Godfather Mergers - Part1" [link] from the troll-itariat:  

"Really big misread on this. You have it backwards. There is nothing in this for existing BECU members. Their capital is diluted by taking SAFE on, it will be a management distraction, and it will drop BECU’s OpEX from 3.43 to 3.30%"

Under the fair payout merger proposal, each SAFE FCU member receives @$1,639 and membership in the combined BECU. The combined capital ratio after the merger is a very strong 11% (the average for all CUs > $10 billion is 10.38% according to NCUA).

The trollish comments - "nothing in this for existing BECU members" and "it will be a management distraction" - are simply amateurish. Criticism of BECU management is completely unjustified. They're "making out like bandits", so to speak. 

But our anonymouse troll saves the worst for last in decrying the fact that the proposed merger "will drop BECU’s OpEX from 3.43 to 3.30%"  

Say what?... that the cost of operating BECU will be lowered from 3.43% to 3.30% is a bad thing? If you go to the grocery store and pay $3.30 for a pound of hamburger rather than pay $3.43, that's a bad thing? This little troll might want to get checked out for "financial microcephalia".

In case you would like the truth: SAFE FCU's cost of operations (troll talk - "OpEX") is a steady 2.50%, while BECU's cost of operations is a persistently rising 3.33% (according to NCUA). In other words, it costs the folks at BECU a third more in operating costs to run BECU, than the cost of running SAFE. 

SAFE is more efficient than BECU and cost wise is the better value for members.

 Well! So much for the ole "economies of scale" claim in hyping up mergers... at least in this case that's "SAFE to say"! 

 

 

 

Credit Unions: The Godfather Mergers...Part 1

   Just make them an offer they can't.... understand.

The proposed west coast merger between BECU and SAFE credit unions has been all in the news [CUDaily] & [Filson blog]. The merger would create a $33 billion credit union, fourth largest in the U.S.

The financial health of a credit union can usually be diagnosed by looking at just a few measurements: capital level, earnings, delinquency, liquidity, and operating costs. These two credit unions are performing well on all fronts! Both strong organizations.

✔ The only real question on this merger is why the SAFE CU Board is "giving away" the credit union at the expense of every SAFE member?   No question this is a great deal for BECU, and a very, very poor deal for every SAFE CU member-owner.  

✅ SAFE  members might like to request this simple alternative merger proposal: Pay out $1,639 to each and every member of SAFE CU (244,000 folks) on the date of merger. The payout is equal to the member-owned reserves of SAFE CU (@$400 million).

After the merger, former SAFE CU members can enjoy all the benefits promised by the combined BECU merger proposal... and enjoy the $1,639 for a short vacation or a little X-mas shopping.

After the merger and the fair payout, the newly merged BECU will remain a solid, safe and sound credit union with combined assets of $33 billion and with a combined, sterling capital ratio of @11%!

Whoever is advising the SAFE CU Board on this proposed merger might want to re-review the concepts of "fiduciary duty" and personal liability with them.  And mention, how tenacious California class-action lawyers are when they smell blood in the water...

That contested $400 million in member equity at SAFE CU can feed a lot of sharks.

 $400 million up for grabs? Kinda makes your "Jaws" drop doesn't it...