HAVERHILL, Mass. – Executives at Northeast Community CU and Haverhill Bank are working with regulators to get the go-ahead for their unusual merger, which some see as by-passing the normal member disclosure procedure for credit unions converting to mutual savings banks.
Thomas Faulkner said what some in the credit union movement see as a back door conversion to a bank does not fit the framework of what has gone before, even though his lawyer also is working on another typical conversion to bank. The two neighboring financial institutions, said Faulkner, have many of the same depositors/members, are both troubled by the local economy and have flat growth, and even have many of the same community leaders sitting on their respective boards. “Some of them even went to high school together,” Faulkner told The Credit Union Journal yesterday.
The $130 million savings bank, he insists, has no intention of a quick cash-in through an initial public offering and plans to retain all of the credit union’s employees and management. Peter Dibenedetto, CEO of the $96 million credit union, will be the likely successor as head of the combined entity, said the 65-year-old Faulkner.
But regulators have been mulling the rare merger, the first switch from credit union to bank since the state passed enabling legislation two years ago. The FDIC has approved the deal, while the Massachusetts Department of Banking is reviewing the application. NCUA, in particular, is concerned that the credit union did not undergo the stringent disclosure and mail balloting process it requires for conversion to banks.
Yesterday, an NCUA official said the agency has been talking with lawyers for the two institutions, but has yet to receive an official application to merge. When it does, the official said, the agency will review within its merger rules to determine whether the rare combination meets the “convenience and needs” of the credit union members.
