CARLISLE, Penn.—An appeal by a group that has opposed the merger of Cornerstone FCU here and Belco Community CU has been turned down by NCUA.
As CUToday.info reported, the Committee for Cornerstone FCU Independence had filed appeals with NCUA and the Pennsylvania Department of Banking hoping to obtain a 90-day delay in the merger, or possibly stop it.
Those moves came after the Committee 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, Dave Keffer, 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.
NCUA Response
Keffer spoke with CUToday.info after receiving the email correspondence from NCUA on Thursday
“NCUA is saying that neither Cornerstone nor Belco violated any applicable laws, regulations or bylaws, and with that in mind they had no reason—no legal grounds I assume—to postpone or rescind approval of the merger,” said Keffer.
Keffer said the email from NCUA addressed the fact 65% of members voted in favor of the merger via a process that conformed with relevant requirements.
“NCUA kept referring to what the agency required (during a merger process), but nothing in their letter spoke to the inadequacy of what was required and that the credit unions controlled the message to the membership—that the credit unions deflected or made inadmissible any competing arguments going out to the membership in advance of the vote.”
Keffer and the Committee have consistently alleged that the message to members was “controlled” by Cornerstone and the Harrisburg, Penn.-based Belco and that many members were not informed of all the advantages and disadvantages of the combination to make an informed decision.
Keffer added that the agency said that in looking at the due diligence given to the merger by both CUs, that it did not see anything that did not correspond with NCUA’s requirements.
As CUToday.info has reported, leaders of the $105-million Cornerstone and $450-million Belco have been confident their merger plans would approved by NCUA.
“We are very pleased with the March 2, 2017, vote by Cornerstone FCU members. The vote was conducted with due diligence and independent oversight, and therefore we are confident it will be upheld by the NCUA,” both CUs shared in a joint statement. “We will continue to be transparent and answer member questions throughout the merger process. This is a partnership between two local credit unions that share a common heritage and commitment to our members, employees, and communities. We appreciate the thoughtful and deliberate work of both boards in positioning Cornerstone and Belco for a brighter future together. Our interests have been, and will remain, in doing what is best for our members and employees.”
Following the most recent decision by NCUA, Sam Glesner, CEO of Cornerstone FCU said, “We are pleased with NCUA's decision. This is a merger of two strong credit unions and we are confident that the merger will benefit the members of both credit unions. As we move forward through the merger process, we can build a stronger more competitive credit union that is positioned for future growth.”
While Thursday’s decision by NCUA is disappointing to Keffer, he said the Committee is not going to withdraw its opposition to the merger. He did not rule out a lawsuit, saying that is “on the table,” but he also acknowledged the costs of such an effort would be an issue in light of the fact NCUA has turned down the Committee’s appeal.
Letters, Letters. Letters
Keffer emphasized that the Committee has been sending numerous correspondences—to NCUA regional offices, NCUA’s chief counsel, and to the NCUA board.
“We also sent letters to the CFPB and to Sen. Elizabeth Warren,” said Keffer.
Keffer feels that those who are not siding with the Committee’s viewpoint are not looking deeply enough at the “whole concept of what a credit union is. That it was created as a cooperative for the members with the idea that all of the members’ self interests is what needs to be considered, not necessarily the self interests of the boards and management.”
In its letter to Keffer, NCUA noted that it did not see anything in the merger contract that will enrich any individual, Keffer said.
“From here, our next step may be to go to appeal to the NCUA board itself,” said Keffer.
Following NCUA’s decision on Thursday, CUToday.info reached out to Cornerstone for comment. CUToday.info also contacted NCUA for comment on the appeal, but the agency declined, saying the matter is confidential.