Members Rejected Tech CU Bank Bid
In September, members of Technology Credit Union voted resoundingly to reject a proposal to convert their institution to a mutual bank.
According to a member of the San Jose, Calif., $1.6 billion credit union, nearly 18,000 members voted in the balloting, with approximately 4,000 voting in favor of the proposal to become a mutual bank and 14,000 voting against. The credit union has about 70,000 total members.
“Obviously, we are thrilled with the outcome and the size of the victory,” said Carlos Rodriquez, the Technology member who kicked off the movement questioning the conversion proposal with a Facebook page and helped organize a Save TCU member group along with another longtime member, Robert Marinace.
Rodriguez said the group was still reviewing its victory but felt confident giving a lot of credit for the victory to social media, which, he explained, had allowed members to organize and notify other members about the proposal and its downsides in ways that that had not been seen before. Social media, he said, enabled Tech CU members who likely never saw each other face to face to get connected with the effort to prevent the charter change.
For its part, Technology’s leadership indicated it understood the members’ intentions behind the voting results.
“Our members have voted and overwhelmingly indicated their preference to remain a credit union,” said Barbara Kamm, CEO of the credit union in a statement announcing the results. “We respect this decision and appreciate that so many of our members weighed in on this important vote. Providing the highest level of service for members will continue to be our top priority–and we will do so under our credit union charter.”
Kamm also noted the frustration many members faced with the credit union’s proposal to change charters and appeared to blame NCUA regulations for not being able to explain the CU’s reasons for conversion more clearly.
“Members at the special meeting voiced frustration, saying we did not make a compelling case for charter change. We, too, are frustrated that we were unable to communicate our views effectively and in the open manner we would have preferred because of the regulatory process and the related rules that govern how credit unions can communicate about charter change with their members,” said Kamm.
Technology’s attempt to change its charter ushered in some firsts in the charter change process. This was the first time that members utilized an NCUA regulation that required the credit union facilitate their communication with other members about the conversion, and it also marked the first time such email contained tracking software added by the credit union. The NCUA has not indicated whether this practice conforms with its regulations.
Technology first announced it was considering a charter change in October 2011.
The other major charter change news involved the $1.8 billion HarborOne Credit Union. The Brockton, Mass.-based credit union’s board approved the proposed conversion on March 21.
“We’ve gotten a very positive response from our membership so far,” HarborOne President/CEO James Blake said. “I’m confident that members will see this as a really good thing for us to do and a really good opportunity.”
Blake, a former chairman of the Massachusetts Credit Union League, said the existing credit union structure and regulatory limits inhibited growth and “a bank conversion would also allow HarborOne to take municipal deposits.” As of November, HarborOne was awaiting NCUA approval of messaging materials.