CARLISLE, Penn.—A group that has opposed an attempt by Cornerstone FCU here to merge with another credit union has filed appeals with NCUA and the Pennsylvania Department of Banking hoping to obtain a 90-day delay in the merger. The $105-million Cornerstone FCU is seeking to merge into the $450-millon Belco Community CU in Harrisburg, Penn.
The moves come after the Committee for Cornerstone FCU Independence was unsuccessful in its bid to get members to vote against the merger. The Committee, which is led by the credit union’s former CEO, has alleged that members were given insufficient information about the merger and that the combination is disadvantageous to them. The Committee’s appeal for a 90-day delay was rejected at the CU’s March 11 annual meeting.
As CUToday.info reported here, on March 2 CFCU members voted 1,100 to 630 in favor of the merger at a special meeting at the Comfort Suites in downtown Carlisle. The merger is expected to be finalized by the fall of 2017.
The 90-day delay is not the first move from the Committee—headed by the CU’s former CEO Dave Keffer—following the merger vote. On March 6 the group released a statement noting that the vast majority of members present at the March 2 vote opposed the merger, and questioned how the meeting was managed by Cornerstone.
Both credit unions, however, told CUToday.info that the vote was conducted in full accordance with all rules and regulations.
Keffer alleges that the request for a delay turned down at the annual meeting is another example of Cornerstone denying members the opportunity to learn “both sides of the story.”
“Ultimately what we’d like to do is get both sides of this merger story out so the full membership will have the information they need to make an informed decision,” Keffer told CUToday.info, adding that the Committee was only able to reach a small number of members with their information on the deal prior to the vote.
The Committee sponsored newspaper and radio ads and created handouts that addressed Call Report data the Committee claims clearly shows that Cornerstone outperforms Belco and that a merger is not needed.
Keffer explained that the motion at the annual meeting was a request to “delay the merger for 90 days so that the board can correct its failure to provide the members with information vital to making an informed decision.”
Keffer said the motion, presented by a Committee member and seconded by Keffer, was turned down by Cornerstone’s attorney, who argued that the motion was presented during the new business portion of the meeting, and that since the motion was not new business it was rejected.
“The board president, Richard Love, acquiesced to what the attorney said,” according to Keffer.
At the annual meeting Keffer said members pressed the board for detailed justifications for the merger.
“I didn’t feel I had received full or complete information. I was not aware other points of view,” one member reportedly said, asking for a delay in the merger, according to the Committee. ”I feel like we’ve been railroaded into this merger.” The Committee reported that another member stated, “I have no confidence in the board,” and asked for a special meeting of members to decide the matter.
With appeals filed with the state and NCUA, Keffer stated that the Committee hopes the merger will either be stopped outright, or that a delay will be granted to allow time to inform the entire membership and conduct a re-vote. Regulators have yet to approve the deal, Keffer said.
“What we are saying is that from the beginning that the Cornerstone board was not doing its due diligence regarding this merger, and that they were not meeting their fiduciary responsibility to the membership,” said Keffer. “As I have repeatedly said, we feel the members need more information than what was given to them by Cornerstone to make informed decisions. We are appealing a number of things about this merger and we feel that in no way is this a done deal.”
CUToday.info reached out to Cornerstone for comment Tuesday, but the CU was closed due to bad weather. CUToday.info will provide comment from Cornerstone as soon as it is available.