NCUA Won’t Contest Backdoor CU Conversion

HAVERHILL, Mass. – NCUA said it will allow next week’s special meeting at Northeast Community CU where members will vote on an unprecedented merger with Haverhill Bank, but an agency official said NCUA will have final say on the deal. “There is no legal requirement in connection with the merger of a federally insured credit union into a bank,” John McKechnie, chief spokesman for NCUA, told The Credit Union Journal yesterday. Consequently, the $110-million credit union will not be required to disclose details of the merger into a mutual savings bank, and fewer than 100 members can approve the deal at next week’s meeting. In every other credit union conversion to savings bank, including a half dozen in which the credit union merged into the bank–NCUA has required member disclosures/ballots at 90-day, 60-day and 30-day increments. But the Federal CU Act will give the NCUA Board final approval of the unprecedented merger, said the NCUA spokesman. NCUA has not received a formal request yet from the credit union, he added. Credit union representatives did not return phone calls seeking comment. The unusual merger will combine two financial institutions based in this old mill town to create a $240-million mutual savings bank. The Northeast Community deal is one of three pending credit union-to-bank conversions being conducted under the Bay State’s year-old law. The others are $115-million First Priority CU and $135-million Community CU of Lynn.