Ohio CUs Proceed With Merger, But Only After Objections Are Raised

Register now

Chilpaco Employees Credit Union will merge with Meade Employees CU, despite opposition from one board member and Chilpaco members, who said they were not given any opportunities for input.

A spokesman for the CU who asked that he not be named said the application had all the required signatures from the NCUA and was on its way back to the Ohio Division of Financial Institutions for final approval. He expected that to come within the week.

"We wrote the check for $120,'' he said. "As far as I know, we have followed all the rules.''

During CECU's annual meeting last week, some of the less than 200 members in attendance criticized the process. One, who spoke at the podium during public comments, reportedly motioned for a membership vote at a later time.

CECU Chairman James Bryan, who is on vacation and was unavailable for comment, quickly tabled the motion and said the member was out of order.

In addition, he said, the members present only represented 1% of the CU's membership of 6,700. The state code requires a quorum of at least 10% attend to vote, suggesting that the opponents didn't have the support they would need to stop the merger.

Board Member Argues Differently

However, John Wise, the only board member opposed to the merger, reportedly told the crowd that he had a conversation with Ken Roberts, acting deputy superintendent of credit unions for the Ohio Division of Financial Institutions, during which Roberts suggested he call if such a motion was not honored. Wise said Roberts suggested that a vote might be required since Chilpaco, though state-chartered, is federally insured. Neither Wise nor Roberts could be reached for comment. The CECU source said he had not spoken to Roberts, but would be surprised and disappointed if the comments were true.

Dennis Ginty, spokesperson for the Ohio Division of Financial Institutions, said the Ohio Revised Code has a statute that allows the financial division to waive a membership vote if requested by the boards of both CUs involved in the process.

According to the CECU source, both CUs did request and were granted the waiver by Roberts, but did not elaborate.

Ginty said he could not answer specific questions about a pending application due to Ohio's "strict confidentiality law.''

Bryan started the annual meeting with a video that highlighted some of the benefits members of the $41-million CECU would gain by merging with the $214- million Meade Employees CU. Those beneifts include access to 18 CU ATMs as opposed to its one, and four offices rather than its one. In addition, deposits would be insured for up to $350,000 (using excess share deposit insurance from ASI).

CUs Serve Same FOM

Ironically, the two credit unions serve the same employee group, Chilpaco Paper Mill, which has gradually downsized from 800 employees to fewer than 300.

Through it all, Chilpaco has apparently experienced some high and low extremes with its loan portfolio, seeing a drop of $1.5 million in 2001, then an increase of $2.5 in the first half of 2002 due to a major push, then a drop of $1 million by the year's end. Already in the first two months of 2003, loans were down by another $2 million.

"As far as I'm concerned,'' the CU source said, "this should have happened a long time ago.''

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER