COXSACKIE, N.Y. – Just outside the chain-link fence and razor wire of the state correctional facility two credit unions are vying to serve employees at the state prison.
Eastern New York FCU, which serves 12 state and federal prisons in the area, has asked officials of Coxsackie Correctional Employees FCU to consider a merger, but so far the tiny credit union, located outside the walls of the state prison, has rejected the overture.
"We were working with the state to secure land to build our own full-service branch and we were approached by a group of Coxsachie members," explained Christopher Langley, president of the $54 million Eastern New York FCU. The credit union, which opened its own branch nearby last year, would like to acquire the smaller Coxsachie credit union, with its offices at the prison.
A merger, according to Langley, makes perfect sense, because the smaller credit union is losing business, a 30% decline in assets last year, and not making any new loans. The $2.7 million credit union is open four hours a day five days a week, does not offer direct deposit or checking accounts and carries no cash. At the same time capital is building up to almost 27% at the end of the first quarter. "That, to me, is scandalous. There’s going to come a day when the members say ‘that’s our money," said Langley.
"They’re losing members, quite frankly, to us," Langley told The Credit Union Journal yesterday. "Members are voting with their feet,"
Langley drove to Coxsachie and approached the credit union’s president Virginia Magee personally with a merger proposal but was turned away. Magee refused to address the merger overture. "I have no comment to make," she told The Credit Union Journal yesterday.
Members of Coxsachie Correctional Employees FCU are preparing a petition to recall the board the tiny credit union with one that will entertain the merger offer, according to Langley, who was notified by the members. "I met with them once. I said what can we do for you."
Langley denied his credit union’s interest amounts to a hostile takeover attempt, even though the head of the smaller credit union has rejected his offer. "There is no hostile takeover in credit union land. That’s the misnomer," he said. "I think what you’re going to see more than a hostile takeover is somebody is going to challenge (board rejections of takeover offers) in court, perhaps as a class action suit."
Under the credit union’s own bylaws, a petition signed by 5% of the members–just 26 people–would force the board to hold a special meeting.
Eastern New York, which claims 7,500 members, has branches at six area prisons but also serves six other correctional facilities because of a so-called TIP (for trade, industry or profession) charter it obtained two years ago to serve all government employees in nine upstate New York counties. Eastern New York acquired a small credit union in nearby Ferndale, $8 million Catskill Regional FCU, in May.
