Category: Mergers

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A Post Every Credit Union Employee Should Read

This is a CEO’s statement  from the monthly staff update:

Our credit union is in a very commoditized business of financial services, most of our products and services can be purchased elsewhere. So our difference is you, how we treat each other and our members to truly change lives one person at a time in our community.

And then a reminder of two guiding principles:  Every person has a story-do the right thing.

Recently consultant Ancin Cooley in a LinkedIn post described why doing the right thing happens rarely to employees in a merged credit union.

His  recent blog should be posted in the employee lounge of every credit union office.  Mergers of well- run credit unions not only eliminate a local grounded financial institution.  They also end employees’ investment in their professional future.   Following is his analysis of the impact of mergers on the most important “difference makers” in every credit union.

How Credit Union Mergers Rob the Next Generation  of What Was Freely Given to the Last (Attention!!! Millennials and GenZ)

The consolidation cheerleaders talk about member impact, technology investments, and competitive positioning.

The executives advocating loudest for mergers  built careers in an industry that had room for them. They were given opportunities for CEO, CFO, and CLO roles at shops, and VP positions at institutions that no longer exist because they’ve since been absorbed. Those jobs paid mortgages, put kids through college, and built retirements.

The Ladder They Climbed Is Being Pulled Up Behind Them

Every merger eliminates leadership positions—CEO, CFO, CLO, and VPs. Two credit unions become one, and half the top roles vanish.For early-career workers, this means fewer rungs up the corporate ladder to reach for. The CEO role at that $350 million credit union that could have been theirs in fifteen years? Absorbed into a $1 billion merger. Gone. “Good luck bud…”

For mid-career professionals who’ve spent a decade building expertise, the chair they were positioning for no longer exists. They did everything right.

The “Efficiencies” Folks Celebrate Are Your Career and Your Money.

When merger advocates toast economies of scale and eliminated redundancies, translate that: they’re toasting eliminated people.
Early-career workers lose the broad exposure that builds future executives. The young professional at a $200 million credit union who might touch lending, compliance, member service, and strategy? At the merged $3 billion institution, they’re a specialist in a silo, building narrow skills with no line of sight to leadership.

Mid-career professionals find their expertise deemed “redundant” when two departments become one. One compliance officer survives. One lending director. One marketing lead. Senior professionals get offered early retirement packages or the dignity of reporting to someone who was their peer last quarter.

The Mission Is Being Sold Off by People It Already Paid

Many younger workers chose credit unions over banks because they wanted work that meant something. The idea that finance could serve people rather than extract from them. Now they watch executives who built wealth and reputation on cooperative principles abandon those principles for scale and extraction. The same leaders who gave conference speeches about “people helping people” or “Main Street Values” now give conference speeches about “competitive positioning” and “Market Forces.”

To the Millennials, Gen Z, and future Gen Alpha workers in this movement: the path is narrower than it should be. And they owe you more than a picture with a politician and the ability to “crash” an event. But the mission that drew you here is still worth fighting for, and you might be the generation that reclaims and rebuilds it.

Every Person’s Chance to Act

Every proposed merger of a sound credit union depends on the overt support or quiet acceptance of staff.  In these situations, they are the first line of defense for “doing the right thing” for members and their communities.

Remaining  obedient or quiescent as leaders plan the demise of their institutions’ integrity and future will compromise the values underpinning both personal and corporate purpose.

Speaking up is never easy.  But that is what makes a democracy work in a credit union or a country.

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Today The People are the Press

Yesterday’s scripture reading was from the Sermon on the Mount. The lesson includes Jesus’s multiple teachings (Beatitudes) beginning with Blessed are the meek. . . Blessed  are the poor in spirit….

On the sign in front of the church, the  sermon title was Blessed are Those Blowing Whistles.

Individuals are doing more than making noise. People are recording and publishing videos, interviews and pictures of federal troop immigration occupations-and the resulting abuses and cruelties -in towns and cities across the country.

Citizen Journalists

The people have become the press, taking their first amendment rights of freedom of speech seriously.  They have used virtual channels and networks to post their stories and pictures.   It reminds one of the pamphleteers during the Revolutionary War.

But citizen journalism is not limited to tracking immigration abuses. Individuals are finding ways to raise concerns about their credit unions.

I am a three decade member of XYZ Credit Union. I was shocked by the proposed merger with YYY which was sprung on our community and membership without warning or advance notice.

I attended the annual membership meeting and there was zero mention of this. The Board of Directors has acted in secrecy and this sellout is now presented as a done deal.

 These kinds of deep worry are sent to my blog address two or three times per month.   Sometimes the opening will begin: As a former employee and long-time member of XXX I am deeply concerned about . . .

These members want to know how to amplify their voice.  And that is the first goal of the member-journalist, to make their concerns public and bring transparency to situations.

Several CEO’s even embrace these individual voices.  One publishes Net Promoter Score comments in the monthly staff update, but not just the 9 and 10 ratings, also the 4s and 5s which are often complaints about a service, policy or  member disappointment.

The credit union press primarily relies on the publicity releases of the industry.  Rare are the occasions for member comment except when picked up from a news story.  Or very occasionally from member comments opposing mergers.

Both credit union media as well as the public press rarely have the resources to pursue individual cases of self-dealing orworse.

Democracy Requires Speaking Out

In a democracy, and especially in organizations claiming to be governed by their members, they will find ways to speak out.  It is the American way.  And ultimately it will lead to organized opposition should their concerns be ignored.

With the emergence of local digital media, these stories are now receiving greater coverage. Here is an example from the Baltimore Banner, an online non-profit news source for the greater Baltimore community.

Project Salt Box: How citizen sleuths are monitoring ICE in Maryland

First they unearthed U.S. Immigration and Customs Enforcement contracts for 42,000 ready-to-eat meals coming to Maryland. 

Then they built a data map of how the federal Department of Homeland Security was distributing its funding.

Last week, two-month-old Project Salt Box and its seven-person team revealed what some say is a sign that an ICE surge could be coming to the state.

The group, which works to unearth and explain the public documents behind federal immigration enforcement, was the first to report on Tuesday that DHS had purchased a warehouse near Hagerstown. In correspondence with Washington County officials, federal officials described how they could retrofit the space to become an immigration detention facility. . . .

The American citizenry is finding its voice.   It will not wait for elections.  Rather it will seek to change leaders’ behaviors now.

Credit unions were nurtured in the grassroots of local activism.  They found sponsor support to create new collaborative options for their community.

This latent activism is just below the surface.  In the transfer of hundreds of millions of member equity and billions of assets to third party control, their voices will rise.  And they should.

Blessed are those cooperators who use whistles of words to rouse their fellow members to stand for economic justice for all. Future generations will honor them.

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The Power of a Single Person

Most of us bristle a little bit when we feel our agency is really limited and there’s nothing we can do about it,

One of the potential advantages of credit union democratic governance is that each person has an equal vote on the annual election of directors and mergers which end a charter’s life.

In both cases this potential for a single member to make a difference often creates anxiety and pushback by those in power.   A current example of this fear is the reaction  by the board of SECU (NC) to former CEO Jim Blaine’s repeated critiques of the credit union’s direction and lack of transparency.

After two years of contested board elections in 2023 and 2024, SECU’s Board made sure in 2025 there would be only the number of candidates as there were vacancies, thus ending a brief span of democratic member choice.

SECU’s conduct is not alone. It is the SOP for most large credit unions.   And in mergers, the process is even more controlling as there are billions of dollars up for “change of control.”

So can one person make a dfference when all the traditional forces are aligned against democratic practice, when regulators are AWOL and the members seduced by their unrequited loyalty to their coop?

One Person’s Effort to Challenge Exploitaton

History shows again and again that one person can change the world, one event at a time.  Here is the story of Bernard Devoto as told in Garrison Keiller’sThe Writer’s Almanac from Sunday, January 11, 2015.

It’s the birthday of historian Bernard DeVoto, born in Ogden, Utah (1897). He loved the wide spaces and big skies of the West, but he felt like an outsider in his hometown — he was raised Catholic in a Mormon town, and he was too bookish and unathletic to feel comfortable there.

He studied English at Harvard. After graduation, he taught at Northwestern and then at Harvard, although he never succeeded in his goal of becoming a full professor there. He wrote a novel, The Crooked Mile (1924), and dreamed of writing the Great American Novel. Then he wrote a book on one of his literary heroes, Mark Twain, a book called Mark Twain’s America (1932). It blended literary criticism and history, and DeVoto found he had a knack for nonfiction, and especially for history.

In 1935, he began a monthly column for Harper’s, “The Easy Chair,” which he wrote until his death. He covered a huge range of topics: the evils of McCarthyism, detective novels, the Civil War, railroads, the Western landscape, the best way to make a martini, and international politics. . .

In the summer of 1946, DeVoto took a three-month road trip through theWest. He had been writing about the West on and off for years, and had just finished two books set there — a novel and a history of fur trading. He wanted to revisit the place in preparation for a book on the Lewis and Clark expedition, and he thought he would write some essays during his trip.

He was horrified by the land abuse that he discovered there. The novelist Wallace Stegner, who wrote DeVoto’s biography, said: “DeVoto went West in 1946 a historian and tourist. He came back an embattled conservationist.” Commercial interests — especially cattle grazers and big timber — were attempting to take back huge amounts of public land, and DeVoto coined a phrase to describe it: a “land grab.”

Instead of the lighter travel pieces that he intended to write, he wrote a series of essays for Harper’s criticizing the assault on natural resources and the exploitation of wilderness. He described how politicians and businesspeople were conspiring with cattle ranchers to open public lands for grazing, and how timber companies were trying to clear-cut national parks.

In one of these essays, “The West Against Itself,” DeVoto wrote: “So, at the very moment when the West is blueprinting an economy which must be based on the sustained, permanent use of its natural resources, it is also conducting an assault on those resources with the simple objective of liquidating them. The dissociation of intelligence could go no farther but there it is — and there is the West yesterday, today, and forever.”

The preservation of Western land and resources became his life’s work. DeVoto lived for just nine more years after his summer road trip, but in that time he published more than 30 essays about Western conservation. . .

The Liquidation of Public Property

I chose this eample of one person’s influence because of the many parallels with today’s credit union’s practice of exploitive mergers.

In almost all these transactions now, members are showered with promises of future benefits while their legacy heritage is taken away and given without compensation to unknown third party control.

Credit unions like the natural wildness on public lands, grow organically from the ground up.  They must start with a core group of common interest to be chartered.  Afterwards it will take a generation or two of member loyalty to become self-sufficient.

Today these merged firms with millions and billons of dollars of asset growth funded with public purpose and tax exemption. are routinely chopped down  after generations of growth and prosperity.

These naturally created dynamic organizations are broken apart for their individual pieces of market value. The member-owners who supported these “forever” institutions are left with nothing except the rhetoric of marketing and PR phrases never defined and quickly forgotten. And the financial spoils are dispersed among the arrangers.

The question remains.  In a democratic institution can one person make a difference, sound the alarm and mobilize others to oppose this predatory behavior?

I’ll give an example of one who had the tenacity to throw back the covers on mergers.  Then see who else might be willing to come forward.

 

 

 

 

 

 

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Saving Miracles on Christmas Eve 2025

After reading this news story in the Philadelphia Inquirer this morning (Credit Union Members Vote Against Merger), Billy Collins’ poem came to mind about this unusual event.  Both are stories of life renewed, once threatened, and  now free again.

Christmas Sparrow

By Billy Collins

The first thing I heard this morning
was a soft, insistent rustle,
the rapid flapping of wings
against glass as it turned out,

a small bird rioting
in the frame of a high window,
trying to hurl itself through
the enigma of transparency into the spacious light.

A noise in the throat of the cat
hunkered on the rug
told me how the bird had gotten inside,
carried in the cold night
through the flap in a basement door,
and later released from the soft clench of teeth.

Up on a chair, I trapped its pulsations
in a small towel and carried it to the door,
so weightless it seemed
to have vanished into the nest of cloth.

But outside, it burst
from my uncupped hands into its element,
dipping over the dormant garden
in a spasm of wingbeats
and disappearing over a tall row of hemlocks.

Still, for the rest of the day,
I could feel its wild thrumming
against my palms whenever I thought
about the hours the bird must have spent
pent in the shadows of that room,
hidden in the spiky branches
of our decorated tree, breathing there
among metallic angels, ceramic apples, stars of yarn,

its eyes open, like mine as I lie here tonight
picturing this rare, lucky sparrow
tucked into a holly bush now,
a light snow tumbling through the windless dark.

 

 

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Two Contradictory Approaches to Credit Union Growth Capabilities

Credit union growth has multiple factors, but two are critical in the movement’s current state.

One strategy is building on the power of local advantage.  This is the ability to interweave common purpose with a community of members. It does  not imply being small or require a limited market area.

This critical commonality is  illustrated by  the home market of city or town.  “Local” is often represened by where the credit union’s historical roots were set down.  Where there is a long term record of its essential role supporting the community economically and in civic roles.  It is where present issues and needs are addressed openly.

This effort is a shared ambition with other “local” organizations seeking  a better future together. The credit union is engaged in services that matter for young and old alike because everyone wants to move forward.

 That is how most credit unions began, supported by a sponsor-employer  which had an important role in the community.   The  shared goal to  enhance a community’s well-being with and for its residents is fundamental in  credit union design whether large or small in operations.

The outcome  can be  large firms serving multiple areas like the $10 billion Wright-Patt Credit Union or small ones such as the $70 million Levittown’s Spirit Financial.  This historical positioning provides a competitive high ground.

At SECU North Carolina, Jim Blaine when CEO said the rationale for building at least one branch in every country was to create a network across  the state that no outside institution could hope tp match.   This  network’s visibility and  service reach are an advantage which  Warren Buffett called a strategic moat.

One of a Kind

Thus advantage isn’t from size or even the number of branches, but the market’s perception of the credit union’s integration and affiliation with the population it serves.

In a new charter roll out, this relationship is gained from the sponsor’s embrace.  This often came with on-site office space, employee volunteers and even payroll deduction, advantages initially unavailable to other financial institutions.

Credit unions with deep community relationship do not survive  by chance or luck. They succeed because their leaders believe in their role as a one-of-a kind option built with generations of local support. These deep community anchors become the foundation for greater coverage as opportunities and needs are sought further out.

The Merger Strategy–How the Big Try to Get Bigger 

When credit unions with these strong, long time local roots are merged, the charter’s ending will also extinguish many of their long standing competitive  advantages.

The historical identity is gone.  Instead a brighter future is promised by becoming a node of a much larger network.  One whose scale and diversity will  enable  greater efficiency and broader service capabilities—all intended to improve member value.

However economic theory predicts that as firms get bigger, it will be difficult for them to grow ever larger.  In credit unions this means the skills for growing organically are often superseded by geater acquisition efforts.  An outcome that results in the atrophy of  internal  growth capablities.  New merged  members are often forced into a more easily scalable digital-first service model.

In a November 2025 article in Kellogg Insight, the authors identify The Growth Factors Propelling Industry Behemoths.  Or how the big get bigger.   It is not by mergers.

Following are some excerpts in which they identify the critical corporate competencies to continue growing.

How have the Golden Arches of McDonald’s and other industry giants like Starbucks, Procter & Gamble, and Coca-Cola grown so much more quickly than competitors and stayed on top for so long?

Kellogg’s Sara Moreira investigated how these companies came to be so huge compared with other firms in the same product category. Through mathematical modeling and an analysis of the consumer-packaged-goods industry, she found that a key factor propelling firms’ growth is standardization: the degree to which a company reuses components, knowledge, and relationships across different product lines and locations.

Take IKEA, which became famous for using similar parts and materials for various types of furniture. Similarly, Starbucks has relied on tried-and-true formulas for floor plans, menus, and barista training to efficiently open more locations.

As a result, standardization practices like these have become a kind of superpower, allowing fast growth and higher responsiveness to increased demand. 

“When knowledge, investments, and inputs are potentially scalable, that can allow the firms to become bigger.” By reusing components and previously successful strategies, “it’s less costly to you,” Moreira says.

How Mergers Inhibit Organic Growh

The author’s examples are of firms that learned how to scale their existing advantages, not by buying firms operating in their industry.

Applying their analysis  suggests that newly merged credit union must quickly dispose of their previous local advantages. They must standardize branch activity, operating and product features while creating a common culture across previously autonomous institutions.

Each of these standardization requirements will erase much of the merged credit union’s foundation for local success.   The new branding often signals to the public just another out of area firm  trying to buy its way into the market.

Despite merger rhetoric about “equals”, enhanced  value from scale, additional expertise and expanded member services, these  promises made to secure member’s voting approval,  lack any unique local character.

Time and again the continuing credit union will assure continuity:  merged members will see familiar employees, branches remain open and the service culture continues. The reality is that as operational integration and back office  conversions take places, the promised continuity ends. Forced change, digital access and new faces are the reality.

Mergers eliminate local leadership including decisions about business prioties and even pricing.  Independent operations end in a flurry of standardization, rebranding and new  leadership.  Corporate assimilation replaces organic growth.  The ability to present a local marketing identity is lost.  The goodwill from generations of member relations is gone.

The issue of whether mergers of independent local credit unions into ever larger organizations will leads to real credit union market growth is an open question.  Today PenFed FCU after over two dozen mergers has fallen over $5 billon from its peak assets.  With core market visibility declining  because of local office closures, it is struggling to recapture organic growth.

In the example of Credit Union 1 and its acquistions of over 20 credit unions in the last three years, it has yet to show an operating net from its existing assets.  Rather the equity level is retained by one time additons of merged credit union’s capital, sales of assets and loans, and gains from undervalued assets acquired in mergers.

Heading to a Cliff?

The credit union system has a vital need for  an analysis of major mergers completed and fully integrated, say over the past five years.  All credit union leaders would benefit from examples of performance comparisons before and after large combinations are done. The outcome of most of these transactions  is a significant unknown.

Such a study should be a priority for anyone who is facilitating these combinations,  The evidence that there are significant member value benefits or enhanced institutional performance is sorely lacking.  It is especially necessary as an aid to public policy and supervision by credit union regulators who now routinely approve these transactions.

The consequences of mega credit union mergers have not been documented.  In the meantime the loss of hundreds of strong  and long serving local institutions is clear.   The critical question is, are these combinations leading the movement on a walk to a cliff edge?

 

 

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Animal Farm Becomes the Credit Union Jungle

From Aesop’s fables to the present day, writers have used animals to portray the failings of human society.

Animal Farm by George Orwell in 1945 used the  metaphor of animals living together in a farmyard to illustrate a political point.  HIs thesis is that power inevitably corrupts.

This inescapable temptation leads to the betrayal of democratic ideals and the re-establishment of totalitarian rule. An outcome enabled by a naive and accepting working class.

Orwell’s story is an allegory of the 1917 Russian Revolution and the rise of Stalinism.  Putting his dialogue in the mouths of animals was an inventive way to show how authoritarians manipulate language to justify their ends.

Ten years ago a credit union observer/CEO used this political satire to describe  deeply troubling trends in the coperatie system.

The blog’s title: Down on the Farm.(Be sure to click read more for the writer’s ending challenge, Who Let the Pigs In?)

An Updated Animal Story–On Film

In these prior stories the pigs are the bad guys.  The credit union commentator and Orwell hoped their literary skills would motivate readers to address  threats both foresaw to democratic societies.

But human nature doesn’t always respond to  danger until it arrives on their doorsteps.

Today’s retelling is not on the farm, but in the jungle. Here the wild animals have no fences or guardrails. They can only be viewed at a safe distance by safari tours.  It is nature in its most natural state.

In this film metaphor, those who feast on other living kindred are the lions.  Their prey are large herds of water buffaloes living on grass plains, at peace with their kin. They do not kill to live.  The game wardens and tourists who witnessed these scenes are observers or, in this parable, clear stand ins for regulators and the public.

The Attack

Part one is just over four minutes. The stealth approach, the pack attacks and captures a small defenseless youngster.  The helpless calf is thrown into a river, where two crocodiles decide the prey should be theirs, not this land bound pride’s.

The action is quick. The situation dire.  The calf’s fate seems sealed.  All the onlookers agree this is a hopeless situation.  Another successful kill.  Moral outrage, anger and even sympathy provide no recourse. This is the law of the jungle in full view.

(https://youtu.be/WXJmvlIckfI)

The Outcome

The calve’s life is over.   The lions lay down to savor their feast.  No help can come now.  It is far too late and certainly life-dangerous to interfere. The end has come. . . or has it?

Here is part two.  Also just four minues.

(https://youtu.be/u1Rt17QglXY)

The adults in the herd, those who cared about their offspring and know the ways of the jungle acted-on the spot

After initially running away, they regrouped, collectively, and attacked. They first circle and then  go after the  herd’s predators one at a time. Angry bulls leading the charge.  They then  cleared the killing field of any stragglers.

The onlookers are amazed.   Even the safari wardens say they have only seen this on film. While unusual the response is not unknown.  It’s instinctive when one’s entire future is at stake.

The Moral or Just an Animal Act?

The response of the water buffalo herd, is what Orwell and Jim Blaine hoped to arouse with their Animal Farm prose imagery.

In this film allegory, these animals understand  how to deal with their stronger predatory jungle inhabitants. If they can work to protect each other, it would seem credit union leaders should be able to turn back their avaricious members feasting on their coop peers via mergers.

In most credit unions, mergers are a matter of life and death of the organization.   If you don’t think so, just ask any of the 41 credit union leaders merged in the third quarter of 2025.  Oh, you can’t because they are now under someone else’s control.

It’s time for the cooperative herd to act.  If not, only the pigs and lions will be the future of the movement.

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A Merger Explained Simply

Yesterday I posted a 3,000 word analysis of the proposed merger of Spirit Financial in Levittown, PA with Credit Union 1 headquartered in Lombard, IL.

Included in the analysis are the reactions of two Spirit members from NCUA’s website:

Member Brian Stuart comment:   I am voting against the proposed merger of Spirit Financial Credit Union with Credit Union 1. Credit Union 1 is based in Lombard, Illinois. All of its branches are in Illinois. There is no advantage to the Spirit Credit Union member to merge with Credit Union 1. Merging with Credit Union 1 would take away the local Bucks County focus of Spirit Financial Credit Union, which should be its mission. . .

Member Joann Glasson:  As a long-time member of Spirit Financial Credit Union, I am sad to see this merger occur when the CD rates are so much lower at Credit Union 1 and the loan rates are so much higher at Credit Union 1.

We are retirees with large deposits at Spirit that we will be forced to move if the merger is approved. This merger is not a service to the members of Spirit Financial Credit Union

Due to the article’s length,  I sent the following summary  to  the press:

$9 MILLION IN LEVITTOWN COMMUNITY WEALTH TO BE GIVEN AWAY – CREDIT UNION CEO WOULD RECEIVE $4.4 MILLION

Spirit Financial Credit Union, a strong and profitable 72-year-old community institution, is being absorbed by Credit Union 1 of Illinois (pending a member vote) and in the process, Levittown’s families will lose nearly $9 million in community-built capital, while Spirit’s CEO personally will walk away with more than $4.4 million in payouts and benefits. Member balloting on this proposal ends Dec. 22.

Spirit Financial isn’t struggling — it is thriving:

  • highly capitalized,
  • financially stable,
  • outperforming peers,
  • and the only locally headquartered depository institution serving Levittown.

Yet in a quiet, opaque merger, every dollar of the members’ accumulated equity of approximately $9 million will be transferred to an out-of-state institution for free:

  • No payouts to Spirit Financial member-owners
  • No equity retention
  • No bonus dividend
  • No local control
  • No sole ownership

Levittown’s families built this wealth, and now it’s about to go away.

Meanwhile, the Spirit CEO who championed the merger receives:

  • A massive cash bonus at closing
  • A guaranteed five-year employment contract
  • Incentive packages to solicit more mergers
  • A fully vested multimillion-dollar retirement package, all totaling more than $4.4 million in personal enrichment.

Community wealth will be removed, assimilated, and relocated, while ordinary member-owners will be left with nothing.

Control of Levittown’s financial legacy will shift to a board in Illinois that is unreachable, unelected, and governed by mechanisms that dramatically limit member democracy.

This is not an isolated incident. Credit Union 1 has initiated over 20 such mergers in just 3½ years, importing hundreds of millions in community assets and capital and using merger accounting to mask weak operating earnings while expanding its asset base by taking over independent, strong local credit unions.

This development raises urgent public questions:

  • How can a member-owned institution be sold without any benefit to its owners?
  • Should executives be allowed to personally profit from the liquidation of community capital?
  • Where is regulatory oversight when cooperative ownership is silently dissolved?
  • Which Pennsylvania credit union will be targeted next?

If this were a stock corporation or public company, shareholders would be compensated, and regulators would not tolerate uncompensated transfer of equity. But cooperative members will receive no payout, no recourse, and diminished legal standing.

 

 

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Helen Keller on Credit Unions

One of Helen’s observations was,  “The only thing worse than being blind is having sight but no vision.”

I received an email last night announcing a merger of a top ten credit union and one of the fastest growing credit unions (their term) in their market.

The release contained this triumphal statement:  The combined credit union will serve 1.8 million members and operate more than 80 locations under BECU’s charter with more than $33 billion in assets. This will make it the fourth-largest credit union by asset size in the U.S.

The email also included a slick PR poster that  made it appear that this was a done deal, between the two firms.  The member-owners apparently have no say or voice.

This “fait accompli” approach suggests the continuing credit union has not looked at the track record of large credit unions whose growth strategy is mergers.  They might want to review PenFed’s recent history as a start.

Only Two Turnovers from Failure

This haughty announcement also confirms the observation that every organization is only one or two CEO turnovers from failure.   This was by a credit union leader who had witnessed countless changes in his four decades.

Failure in his view was not financial, but the end of an independent, sui generis, credit union.  It occured as subsequent leaders lacked commitment to, and often knowledge of,  the organization’s founding principles.

In tlhis case the continuing credit union had been led for over three decades by a CEO who could have chosen to merge multiple credit unions supported by his single sponsor.  But that was not how he thought coops best served their members.

I’m sure there will be more to learn about this transaction as we get past the “people helping people”  claptrap.   With this swaggering start, the rest of the story will likely become another case study of credit union CEO’s and boards implementing “The Art of the Deal.”

 

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On Mergers: Everyone is Doing it-Why Shouldn’t My Credit Union?

I received a communication from an experienced, throughtful and committed credit union leader last week.   He believes in the unique role of  cooperatives in the American financial system.

But he is throwing in the towel, so to speak.  He has been an advocate for member value, especially in merger situations.  That strategic choice, he believes,  should be especially well-documented with data and plans.  Because it ends the independence and member choice of a long serving institution.

Most importantly he supports the position that owners, whose loyalty created the credit union’s mutual equity, should benefit from such combinations.

No more though.  For his stance for cooperative integrity has resulted in an anti-merger reputation.  In his words: We live in a capitalist society, and we have a cooperative movement that often co-opts cooperativism while fully embracing capitalism. . .  So rather than spending my energy in opposition to that current, I’m shifting toward supporting the institutions that actually want to grow strategically and maintain themselves — the ones who want to remain independent, sharpen their execution, and live more fully into their cooperative identity.

He will find that there are plenty of cooperative leaders who still embrace that approach.

Moral Relativism and the Erosion of Public Trust

But there is another rationale I hear repeatedly from credit union leaders defending the growing merger frenzy. This logic asserts: Mergers are the wave of the future; everyone is doing it; so let’s not be left out of this treasure-scavenger hunt now going on.

This defense, everyone is doing it, is common in many areas of life, not just in business.  It quickly leads to moral relativism.  That is, some asset,  cooperative values must keep up with the times and current practices.

Last week the Wall Street Journal published an opinion piece of this frequently stated defense for leaders’ actions. Here are excerpts from that article by Gerard Baker: (link)

Moral relativism is enticing. It enables me to establish the moral value of everything I do by reference to the behavior of others. It allows me to avoid censure by judging my intentions, choices and actions not on the basis of whether they are intrinsically right or wrong, but by the lesser standard of whether someone in a similar position might have done something similar.

It is deeply corrosive of personal mores and social trust. Over time it dulls the conscience to any moral hierarchy. It is never a legal defense and shouldn’t be a moral one.

Moral relativism is hardly new in public life. Self-exoneration through false moral equivalence by public figures is as old as time itself. But when it becomes the controlling ethical architecture of public behavior, we are in serious trouble. Its effect is to give leaders permission to do just about anything they want, unconstrained by guilt, shame or political sanction.

Moral relativism and the ratchet effect will ensure that there is always some precedent close enough to persuade people to shrug even when confronted with some evidence of genuine turpitude on their own side.

The Questions for Coop Mergers

Isn’t it time for credit unions who believe in the special role of cooperatives to ask whether this increasing frenzy is really serving members or merely the acquisitive ambitions of CEO’s and passive boards?

Only about 3-4% of  of credit unions will  complete a merger in any one year.  Yet the vast majority remain silent as some of their peers become coop predators.

Are leader’s  uncritical acceptance of this restructuring a sign of the system’s strength or a fundamental weakness?

There are many more questions that should be asked. (link)  But the most important one is Qui bono, Latin for who benefits?

Required disclosures in the NCUA approved Member Notices suggest it is rarely the members.

 

 

 

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At a Merger Inflection Point-What Should Credit Unions Be Asking?

The ordinary human being does not live long enough to draw any substantial benefit from his own experience.  And no one can benefit by the experience of others. . . each (generation) must learn its lessons anew.  (Albert Einstein) October 26, 1929)

On October 20, 2025 Callahan published an analysis with multiple charts showing how mergers are changing the institutional character of the credit union system.   The graphs have ten and twenty year time lines documenting the number, size and source by peer group of this consolidation.

The analysis, Credit Union Mergers on the Rise, provides essential macro trends to track how this consolidation is affecting the institutional structure of the credit union system.  One example is that over the past ten years the average credit union asset size has increased from $188 million to $538 million.

There are many other data points one might take from the article to help frame critical questions that should be considered, but are often overlooked.  For  many view this consolidation as inevitable or even necessary.

Several Important Questions that Need Answers

The basic financial math of credit union mergers is simple:  1 + 1 = 1.  There are no added members, shares, loans, employees or outlets.  Instead in most cases a financially strong long-standing coop has turned over all of its members’ assets, equity and future direction to another organization. One whose leadership they had no role in evaluating or choosing.  Sometimes the new management’s head office is hundreds or even thousands of miles distant with no connection to the merging  credit union’s members and community.

Credit unions are built on relationships/bonds and generations of member-owner loyalty.  That commitment was their initial, “sweat equity” capital and the foundation for much of their public reputational goodwill today.

So it is important to consider whether these trends and sometimes questionable activity are helping or hurting the system’s future.  Are mergers a symptom of a system’s weakness, an inability to sustain organic growth,  or a strength?

The Need for an Industry Conversation

Other questions that could help member-owners and cu leaders better understand and evaluate what is occurring could include:

Is consolidation resulting in fewer charters inevitable?

How has the coop system’s approach to merger changed over the past decades? 

What role and benefits are third parties gaining in promoting these combinations?

What are options for credit unions who feel the need to merge?

What should member-owners know when asked to approve the transfer of their entire coop’s assets and legacy about the performance, business priorities, and  leadership of the continuing credit union?

What is the fiduciary duty to the member-owners when leadership decides to seek a merger? How should the conflicts of interest be addressed when CEO’s negotiate their own merger benefits? 

What is the regulator’s role when reviewing merger applications?  What is their obligation to the member-owners?  Are they responsible for the information owners receive when approving the Member Special Meeting Notice announcing members’ required voting approval?

Has there been any multi-year studies of well capitalized credit union mergers and the before and after performance trends over a five year period?  How did member value change? What happened to the community relationships and employees?  What are the additional immediate costs incurred by mergers?

Who Will Lead These Dialogues?

How one introduces an issue will often determine what outcomes will be proposed. With mergers occurring  at an average of three to four per week, there has been no industry discussion of the  implications and the benefit or harm to the members-owners.

Now, not later is the tme to understand the consequences of these i mergers, espcially with the dramatic increase in scale. Billions of member wealth is now being transferred for free with minimal information provided the owners who must approve.

Individual examples of multi-billion dollar cross- country combinations or of a credit union completing four merger approvals in  one month (and ten in one year) are routinely announced.  But these separate, individual events, will have significant consequences for every other credit union.

For no credit union stands alone.  All are part of an interdependent  system which creates individual  opportunities and vulnerabilities.

Merger activities are having  lasting consequences for the member-owners, their communities, and the shape of financial options in America.

The future of the coop system will be different.  These concens are not an effort to go back to what was.  Rather it is a necessary examination, as Einstein suggests, to gain our wisdom now and not wait for future generations to assess what went right or wrong.