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ARLINGTON, Va. – The fight over the two billion dollar-plus Texas credit unions which are seeking to become mutual savings banks moved into the U.S. postal service last week as letters flew back and forth between a relatively new bankers’ group dedicated to supporting credit union charter conversions and the Texas Credit Union League. The two Dallas-Fort Worth area credit unions, the $1.4 billion Community Credit Union and the $1.2 billion OmniAmerican Credit Union, have announced their intention to become mutual banks, and Community has set a Special Meeting in June to vote on the question. Craig Rohden, the CEO of the $20 million Space City Credit Union headquartered in Houston sparked the letter exchange with a commitment to offer $1,000 for an advertising effort which will try to make a case for keeping their credit union charters to the members of the two CUs. Because both credit unions are in such a major metropolitan area, advertising designed to influence members’ decisions about the controversy have been deemed very expensive and the Texas Credit Union League has refrained from authorizing an advertising campaign in favor of empowering League leaders to speak out about the conversion question. Rohden opposed the League’s lack of action and said that is what prompted him to make the offer of $1,000 to a fund which would back the expensive advertising. His offer, which appeared in Credit Union Times’ April 6 issue, earned him a letter from an organization called the Coalition for Credit Union Charter Options, a group made up primarily of bank executives which threatened him for his offer. In their March 30 letter the Coalition, which is led by Lee Bettis, a former credit union executive turned banker and advised by three bankers whose institutions converted to banks, wrote Rohden, instructing him to “refrain from libelous claims about `greed’ and `undue enrichment’ as motivating factors behind the decisions to adopt a plan of conversion. If you persist in your plan to run advertisements, the Coalition will monitor your actions closely and hold you accountable for your published statements.” Rohden said he was not intimidated by the letter and said that he would continue with the advertising campaign if there were other credit unions who also wanted to put up money. As of press time, he reported having heard from other credit unions in the Houston area which also expressed an interest in participating, but that none of them have made any firm commitments of money yet. “Right now, I think I am just waiting to see if the idea percolates a bit,” Rohden said. “I expect this will be an idea that grows over time, if it grows.” The CCUCO letter, in turn, drew a sharp rebuke from Dick Ensweiler, head of the Texas Credit Union League who has himself been taking some complaints from those who believe the League should take a more active position. “It seems that bankers are not content with limiting their bully tactics to the statehouse anymore,” said Ensweiler. “Now out-of-state bankers are going after small Texas credit unions that dare to speak out against their concerted campaign to convert credit unions to banks.” Ensweiler wrote Bettis in his April 5 letter that he found it “interesting” that Bettis considered Rohden to be a member of an “outspoken minority.” By contrast, Ensweiler wrote, Rohden’s beliefs about credit union charter conversion are held by nearly all CU leaders. “I applaud Mr. Rohden and his colleagues for their passion and willingness to speak out on this paramount issue, and I hope they will continue to do so,” Ensweiler wrote, adding later, “If Mr. Rohden and other credit union leaders wish to help educate the credit union members in question, more power to them.” Ensweiler’s words took on a slightly hollow ring, however, in the light of the League declining to contribute any of its own money to Rohden’s or anyone else’s advertising effort. One credit union executive, who refrained from speaking for the record since his credit union is not in Texas, said he could not understand why the League would not spend at least the dues money from Community and OmniAmerican since that money would be lost anyway should the credit unions become banks. Ensweiler said that it would wait to see how well the NCUA’s new disclosure regulations worked in regard to Community and OmniAmerican before it decided to take any additional steps. The Community disclosure statements have been out for more than 10 days and no one from the League has commented on them. The League’s annual meeting began as of press time and kept Ensweiler from being able to comment, a League spokesman said. Meanwhile, Laurie Stewart, the CEO of Sound Community Bank, headquartered in Seattle, Washington and formerly the CEO of Credit Union of the Pacific, said that she joined the CCUCO Board of Advisors because she views the NCUA and the credit union industry as actively trying to keep credit unions from choosing a viable charter option and because “it’s just not true” that the leadership of credit unions who convert do it for the money. “Really, that is just not so,” Stewart asserted. Her credit union became a mutual bank two years ago and has grown from $141 million in assets when it converted to $175 million now. Unlike her co-executives on the Advisory Board, Garry Graham, the CEO of the Affiliated Bank of Bedford, Texas, which converted from a credit union in 1998 and Herb Moltzan, the CEO of BUCS Federal Bank of Owings Mills, Maryland, another 1998 credit union charter convert, Stewart’s institution has not issued stock and she says it will not do so. Instead, Stewart says that the bank will issue preferred trust stock, an approach which will allow the bank to raise the capital it needs without having to comply with Securities and Exchange Regulations as a publicly traded company. Stewart said that the ability to become a bank is something that many credit unions need to be able to at least consider doing and that the industry does itself no good when it seeks to forestall the move outright in every case. “The credit union people that I am still close with, that know me and know why we did this, do not criticize our decision or suggest any greedy motives,” Stewart said. Sound Community has retained its membership in the credit union owned CO-OP Network, a membership which Stewart acknowledged gave her bank a competitive advantage over competing banks who could not join such a surcharge-free ATM network. -

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