Rather Than Convert, Group Raises Question Of Liquidation
PLANO, Texas-A group of Community CU members opposing the giant credit union's conversion to mutual savings bank is trying to get another option presented before members during the June 21 special meeting--an unprecedented liquidation of the $1.4 billion credit union and payout to members. Under one scenario discussed, the assets of the credit union, including loans and capital and brick and mortar, would be sold for book value of $250 million--enough to pay each of the credit union's 250,000 or so members $1,000. But the group knows that the liquidation option is an uphill struggle because it must first be approved by the Community CU board before it is put before members at the special meeting. "We're discussing all options that we have at this time," Mark Arnold, the leader of the Texas Coalition for CU Members, told The Credit Union Journal, of his group's plans for the special meeting. "Ultimately, it's going to be how they (credit union officials) handle the meeting from a Roberts Rules of Order perspective." Opponents of credit union conversions believe members should have the option of voting for a liquidation and payout, as part of the balloting on a conversion to mutual savings bank, but such an option has never been presented during a conversion vote.
Directors, CEO At Former Credit Union Have Seen Rich Rewards
CHULA VISTA, Calif.-If the 15 converted credit unions to test the public markets have experienced mixed results, at least one has been an undisputed success, from a financial standpoint. Just three years after its initial public offering, First PacTrust Bancorp-known until January 2000 as Pacific Trust FCU-has more than doubled in size to $700-million and its stock has appreciated more than 150%, earning top managers and directors of the ex-credit union millions of dollars in windfall profits. Directors who engineered the credit union switch to bank have more than doubled their money, so that long-time chairman of the board Alvin Majors has accumulated $1.6 million worth of stock in the converted credit union, while former volunteer credit union directors Francis Burke, Kenneth Scholz, Donald Purdy, and Donald Whitacre, have all accumulated between $1.4 million and $1.6 million worth of stock in the CU-turned-bank, according to documents filed with the Securities and Exchange Commission. But perhaps the most wealth accumulated from the conversion of a credit union has accrued to First PacTrust's president and CEO, Hans Ganz. Since the 2002 IPO, Ganz has accumulated either shares or the rights to shares to be vested over the next few years, that includes restricted stock grants and options, worth $3.9 million. During that time, 11 insiders, including Ganz and five other top managers and the five non-executive directors, have accumulated almost $18 million worth of stock in the credit union-convert.
Two Former CUs-Turned Banks Agree To Merge In Stock Deal
EAU CLAIRE, Wis.--In what once would have required little more than a handshake, two converted credit unions have agreed to merge in a stock deal valued at $9.2 million. Under the deal, Eau Claire, Wis.-based Citizens Community Bancorp, known until January 2002 as Citizens Community CU, will acquire Community Plus Savings Bank, previously known as Community Schools FCU, adding Community Pluses two Michigan branches to its own network of 10 branches in Wisconsin and Minnesota. Community Plus Savings Bank, which converted from a credit union in January 2002, has had declining fortunes over the past year, with loans dropping 15% in 2004 to $28 million, net income falling 15% to just $410,000, and assets growing just 1% to $46 million. Stockholders of Citizens Community Bancorp, which has grown 66% to $168 million since switching from a credit union, will vote on the merger at a special meeting next week.