A week after abandoning its controversial bid to convert to a savings bank, DFCU Financial took on a new project-saving the jobs of its nine directors who voted for the charter switch.
The $1.8-billion credit union began campaigning last week to sway members who may participate in a recall vote petitioned by more than 1,700 members. In fliers and a new website (savedfcu.com) the credit union giant began making dire predictions if the members are successful in removing the directors, like "by attempting to remove the Board, your money could be in jeopardy."
Thousands of flyers were also being handed out at DFCU branches proclaiming, "Protect your money, Save your credit union-Vote NO! NO Change-NO Recall." The campaign material includes allegations that the members' want to "have branches only in Dearborn," or "want to eliminate Investment Services."
The savedfcu.com website also proclaimed the members succeed in recalling the board "The NCUA-the government-would appoint a conservator until a new slate of directors could be elected at the next Annual Membership Meeting, which will be sometime in February 2007. This typically only happens to insolvent credit unions that is why this is such a drastic measure. Do you want the government to choose the leadership of DFCU Financial?"
But NCUA said some of these statements, particularly the one about the conservatorship, are in error and give members a false portrait. "I don't know where they got that from, but if the recall of the board succeeds then the supervisory committee would then be given control and they would be responsible for scheduling elections for a new board," said John McKechnie, chief spokesman for NCUA.
CU Deja Vu
The effort by the credit union is reminiscent of a similar campaign three years ago by Columbia CU, in Vancouver, Wash., to save its directors from recall after the board was convinced to withdraw its application to convert to a mutual savings bank. The eight directors targeted for recall (a ninth hadn't vote on the conversion) all narrowly survived after an expensive campaign by the credit union that included fliers, advertisements in local media, and telephone calls from a Wall Street proxy solicitation firm. However, one by one, the old guard at Columbia CU was turned out by the membership over the succeeding two years either by vote or retirement.
Officials at DFCU did not return phone calls seeking comment last week.
Recall Effort Still On
But leaders of DFCU Owners United, the group that spearheaded the members' revolt, said they are pushing on with the recall, for which the credit union is required under its own bylaws to schedule a special meeting within the 30 days of April 18. The bylaws also require the board to give members seven days' notice of the meeting.
Leaders of the members' group said they had not been notified of the credit union's intentions, even though the new campaign on behalf of the directors suggests they will schedule a special meeting. "We haven't heard anything from them yet. They have 30 days to respond," said Linda Malec, former chairman of the DFCU board and one of the group's leaders.
Meantime, DFCU Financial reported last week the first quarter of the year was another banner quarter. DFCU reported that its financials remain among the strongest among the nation's credit unions, with first quarter net income of $7.8 million and a 1.7 return-on-average assets for the first quarter, putting it among the top performers in the nation, according to data compiled by Callahan & Associates. The credit union reported strong loan growth of 7% annualized for the first quarter and growth in net capital of 16% to $237 million at March 31.
