WASHINGTON (4/24/08)—Members of Northeast Community CU, Haverhill, Mass., will have to recast their votes regarding their credit union’s plan to merge into Haverhill (Mass.) Bank, according ot Mary Dunn, deputy general counsel of the Credit Union National Association (CUNA). Dunn said the National Credit Union Administration (NCUA) last week deferred a decision on the merger until a membership vote is taken which meets the requirements of the agency’s rules for converting a credit union to a mutual savings bank. The decision, in effect, negates a 77-1 membership vote cast last September in which Northeast Community members approved the move. Sixty-seven depositors at Haverhill Bank had voted unanimously the week before to approve the bank's proposed merger. In 2006, the NCUA unanimously approved a new rule governing conversions from credit union to mutual savings bank charter form, The rule was intended, in part, to make it clear that the agency supports and encourages communications to members and between members. The final rule revised disclosure and voting procedures, as well as procedures to facilitate communications among members and for members to provide their comments to directors before their credit union board votes on a conversion plan. It also specifically requires directors adopting a conversion proposal to determine that the conversion is in the best interest of the members. It mandates that directors sign a document certifying that they have fulfilled their fiduciary duty to members in their pursuit of a conversion proposal. Also under the rule, boxed disclosures to members prior to a vote must clarify:
* Specifically what a "yes" vote or a "no" vote means in terms of the wording on the ballots; and * The effect of a conversion on the credit union member in terms of the loss of beneficial savings and loan rates and charges for services when average credit union products and services are compared with those of other financial institutions.
If the merger is ultimately approved, the resulting bank would have combined assets of roughly $260 million, deposits totaling $220 million and capital totaling $30 million. It would have the second-largest market share in Haverhill. David Cotney, COO of the Massachusetts Division of Banking, confirmed Wednesday that the merger application is still pending action by the state regulator. He added that his agency does not comment on matters pending action. Haverhill Bank CEO Thomas Faulkner was unavailable for comment Wednesday. The NCUA declined to comment.