Windfall Profits Eluded Ex-CU'sMembers
FEASTERVILLE, Pa. - (05/19/05) -- Long-time members of IGA FCU weremostly left out of the money when the credit converted to a mutualsavings bank in 1998, then swiftly became the first credit unionconvert to sell stock, before being taken over by a localbank--earning investors a $14.2 million windfall. Documentsreviewed by The Credit Union Journal show that only 1,125 investorstook part in the 1999 initial public offering for the credit unionconvert then known as IGA Federal Savings Bank, many of thembelieved to have been recent depositors planing to take advantageof the IPO or outside investors. That means fewer than 5% of the22,200 members of the credit union shared in the profits from thesale of the institution. IGA went public at $8 a share in Octoberas Jade Financial Group, then rose quickly to more than $11, beforebeing sold to nearby PSB Bancorp for $13.55 a share, or $24million. That earned investors a $14.2 million profit, or 60%, injust a year's time. Executives and other representatives of thefirst credit union-convert to go public told The Credit UnionJournal at the time they believed the majority of the stock wassold to former members of the credit union, who got the firstchance to buy shares in the initial offering.