ODESSA, Texas -- After a long and controversial lead up to the First Basin Credit Union annual meeting, members opposed to the attempted conversion to a mutual bank failed to unseat three board members who had supported the conversion.
The $115 million credit union filed an application to become a mutual bank and then suspended the balloting in February before it was complete, alleging that opponents of the move had been lying to other members about the proposed conversion. The credit union then delayed announcing the date of its annual meeting where some board members were up for re-election. The CU in a legal action has sought to depose the members who helped organize the opposition group, Save First Basin.
Those depositions have been scheduled for April 22.
According to CU members who attended the meeting and local press accounts, about 500 people attended the April 15 meeting, many of whom were either employees of the credit union or their family and friends. Local press accounts stated that 414 people voted in the election with each of the three incumbents drawing at least 300 votes. The highest vote count for one of the challengers was 87.
"I remember about 30 minutes into [CEO Shem Culpepper's] hour-long attack on Save First Basin, on the Member Trust group, and me by name, when their supporters were all clapping and yelling, I passed a note to a buddy of mine about how they have the numbers at this meeting," said Danny Armstrong, a First Basin member and a Save First Basin supporter who was also a candidate for the board.
Armstrong is the husband of Tammy Armstrong, a vice president with another CU in the area, a point that Armstrong said drew a comment from at least one person about potential conflict of interest. Armstrong snorted at the memory of the comment, noting that the members of the CU were not told which board members would be up for re-election or even that Culpepper was on the board at all.
"That sounds like a huge conflict of interest to me," Armstrong said. "How can a guy be a member of the board that has the power to hire or fire him and then have that board make those decisions," he asked.
Armstrong said that the board members had been unprepared for Culpepper to be on the ballot and suggested that he was such a polarizing figure with members that if members had known they could have voted him off the board, the meeting attendance and voting might have been very different.
"We arrived expecting to vote on three board positions from a seven-member board, with the other four sitting out because this was not their year," Armstrong explained. "I was floored when I found out that Culpepper is on the board. It turns out there were eight board members after all."
Culpepper's name had not appeared on any other listing of board members that had been shared with members, Armstrong said.
Armstrong also recounted that the ballots were not anonymous in that each ballot had the account number of the member stapled to it. When members questioned this, the parliamentarian the CU hired to conduct the meeting told them that there was no provision in the bylaws for anonymous balloting at the meeting.
According to NCUA data, as of the end of last year First Basin had 77 full-time and part-time employees and both Armstrong and Letty Moreno, one of the organizers of the Save First Basin member group, estimated all the employees attended the meeting with their family and friends to help pack the voting.
"You had to figure they had their network of supporters as well," Armstrong said, "family and friends and folks who were associated somehow with the board members. And of course the turnout could have been different if members had known about Culpepper being on the board and up for re-election."
First Basin did not return phone calls or e-mails asking for comment on any part of its handling of the conversion application, balloting or subsequent controversy.
But both Armstrong and Moreno recounted the hour-long diatribe against the Save First Basin members that Culpepper launched, without offering any time for rebuttal, before the meeting was ever formally called to order.
"The meeting was scheduled for 7:00 but didn't get formally underway until 8:02," Armstrong said. "That entire hour was all Culpepper attacking us, attacking the Save First Basin site and attacking the Member Trust [National Center for Member Trust] organization," he said. "Whenever anybody tried to offer a defense or another point of view or anything in opposition to what he was saying, he called them down or insulted them or told them they were out of order," Armstrong said.
"The entire thing was really just one long attack," said Moreno, "with no chance for discussion or debate. It was incredibly unprofessional."
Armstrong, Moreno and press accounts recounted that Culpepper devoted a significant part of his attack to making the case that the group was being manipulated by the NCMT, at one point citing the similarities between the Save First Basin site and the site of members who opposed a successful conversion attempt at the $186 million Beehive Credit Union, headquartered in Utah.
But Armstrong countered that whatever similarities their might have been between the sites could be expected since both sites were formed by credit union members who opposed their credit unions becoming mutual banks. Since the challenges were the same, Armstrong pointed out, it would not be unusual for the objections to be similar.
"There was an undercurrent running through [Culpepper's] comments that we were just not smart enough to have decided on our own that we wanted our credit union to remain a credit union," Armstrong said. "It was really pretty insulting."
The emotional meeting came on the heels of a long series of controversies that arose after the CU stopped the balloting and then withdrew its charter change application. In addition to the delayed annual meeting and the deposition of members from Save First Basin, the members also announced they had filed a petition to depose Culpepper and Board Member Annette Snowden.
"Petitioners would further show that Culpepper and Snowden made such comments as SAVE First Basin were 'puppets' for the National Center for Member Trust," and that "they basically don't want to see this credit union to succeed," the members said in their legal filing.
"Mr. Culpepper also allegedly stated that legal action was needed against SAVE First Basin Credit Union because 'SAVE First Basin had not been cooperative in providing information.' Furthermore, Culpepper allegedly stated Save First Basin leaders engaged 'in a scaremongering stew of lies, misrepresentation and innuendo.' Further, SAVE First Basin made a 'constant stream of false and misleading information.' At best, the statements are derogatory, and at worst, they are actionable," the filing added.
The members received a fair amount of media attention as well. A press conference called to highlight the coming annual meeting and announce their legal filing drew three out of the four local television stations as well as the local newspaper. The members also were the first to use an airplane to try to help draw member turnout and attention to their efforts. Pooling their money, some Save First Basin supporters hired a plane to carry a banner for two hours in the skies over Odessa on April 13.
Moreno said the members had hired the plane and chosen the time for it to fly in the hopes of catching residents on the way out of church or to a meal out afterwards. The banner read "First Basin Vote Tues! SaveFirstBasin.com."