ROANOKE, Va.–When the voting period for a proposed merger with Virginia Credit Union concludes today for members of Member One CU, it will mark one of the rare instances where there is organized opposition to a CU combination.
What members are getting from the merger has also been questioned by a national analyst, who notes that Member One CU’s management will receive more than a half-million-dollars in payouts if the combination is approved, including $250,000 for MOCU CEO Frank Carter.
As CUToday.info has reported, the $1.648 billion Member One CU is seeking to merge with the $5.29--billion Virginia Credit Union in North Chester file, Va. In announcing their plans to combine earlier this year, the credit unions did not cite any member benefits other than expanded branch locations and a statement that “this partnership represents the heart of the credit union industry’s cooperative mindset.”
The merger plan calls for Member One to retain its name and operate as a division of Virginia Credit Union.
But not everyone has been on board.
Six Points of Opposition
Those opposed to the merger have been hosting a website, VoteNoMemberone.org, in which they explain why they don’t favor the deal, with six points emphasized:
- There is no real benefit to the members
- This is bad for Roanoke Valley
- VACU is only after the numbers
- Different culture, different fees
- You will become a number, not a member
- You are NOT being communicated with
Member, Employee Comments
The site also includes comments from members as well as employees.
One person who claims to be an employee of Member One posted on the site, “I am currently an employee at MO at a branch and wish to remain nameless for fear of retaliation. VACU’s goal is to be a $10b CU within the next 5-6 years. MO is just a ‘cog’ in the wheel and there is no true benefit to merging for MO members…Truthfully, there will be people let go at some point b/c of redundancy, while nothing will change at first, by Operational Day 1 in late 2025 or 2026, you will likely see fees change, call center moved to the one in Richmond.”
One Person’s Analysis
In a post on his blog, Chip Filson, the former director of examination and insurance at NCUA and a co-founder of Callahan & Associates, questioned the benefit for members of Member One, writing that the “five highest paid executives of Member One FCU will receive $570,000 in bonuses; the continuing, Virginia Credit Union, takes over a very sound $1.7 billion balance sheet and adds $155 million new capital to its net worth, and the members receive only free cookies for their 84 year old successful credit union…The members will receive nothing from their $155 million of collective capital (9.57% net worth) and four generations of loyal support.”
‘The Status Quo’
Filson noted that the notice provided to members “confirms that this merger is not about change but rather continuation of the business status quo,” listing as the reasons for the merger:
- “Same knowledgeable, Friendly Employees. The credit union’s main office and branches will remain open, subject to good practices and safety and soundness.”
- “Changes to services and benefits: There are no anticipated changes to core services and member benefits.”
“The only advantages referenced in the Notice are general assertions about potential future capabilities which are completely undefined either in time or factually,” wrote Filson. “An example: ‘we would ultimately gain economies of scale’.”
Filson said the disclosures provided members show $575,000 is to be distributed to the five most highly compensated employees at MOCU, including $250,000 for CEO Frank Carer.
Incomplete Information
“But even this disclosure is incomplete and therefore misleading,” Filson wrote on his blog. “NCUA rules require that members be provided a “detailed description of all merger related financial arrangements. This description must include recipient’s name and title as well as at a minimum, the amount of value of the merger-related financial arrangement expressed, where possible, as a dollar figure. CFR $ 708b.106(b)(4)(v).
“There is no disclosure of any contractual employment terms suggesting that these five are ‘at will’ employees even though the Notice clearly states a bonus commitment and conditions,” he continued. “It would be highly unusual for senior executives not to have a written contract from their new employer, with their bonus benefits and future employment after the merger. Those facts must be disclosed under the rule.”
Filson raises numerous other issues related to compensation and more on the blog, which can be found here.
The Financials
As of June 30, Member One had 154,858 members and reported $4.272 million in net income, with capital of 9.56%. Virginia CU, which has approximately 332,000 members, had $10.45 million in net income and net worth of 1072% as of the same date.