DEARBORN, Mich. - Like a volcano which only slowly builds towarderuption, the sentiment among members of the $1.8 billion DFCUFinancial against the credit union's proposed conversion to amutual bank appears to be building steadily and may, eventually,explode all over the current board. The credit union, largest inMichigan, announced it had applied to convert in December 2005. TheCU sent ballots and disclosure documents about the move to those ofits 160,000 members that are eligible to vote on Mar. 23 of thisyear. The story's temperature began to rise last week with the newsthat members opposed to the conversion began to picket at some ofthe credit union's branches and ATMs in an effort to alert othermembers to the conversion attempt and to influence them to voteagainst it. The protest ranged from a couple of members standingwith signs outside ATMs at one branch to small groups of memberspicketing with signs at other locations. Margaret Blohm, anorganizer with the DFCU Owners United group, the group of DFCUmembers who are united against the charter change, said it wasdifficult to tell exactly how many members participated sincemembers protested at three separate locations and people came andwent over the protest period which lasted from 10:00 AM to 2:00 PM.In some cases people coming to do business at the CU joined theprotest when they heard what is was about, Blohm said. One womanwho didn't know anything about the conversion attempt came back outafter finishing her transaction and asked for a sign to join thepicket line. "I have been a member since 1967," Blohm recalled thewoman saying; "they aren't doing this to my credit union." Thesigns read things like "Good For Who?" and "Say No To Becoming ABank" as well as the group's slogan, "Don't Make Our Credit Union aBank." One member plastered his extra large Ford pickup truck withanti-conversion advertising and parked it in various DFCU parkinglots during the protest time as occasional members of the CU'sstaff came out to challenge the protestors, Blohm said. The groupsaid this was merely the first in what it hopes will be a series ofprotests that will run, and grow larger, as the 90-day votingperiod continues. That prospect might have gained further momentumdue to some remarks from DFCU CEO Mark Shobe that ran in the localpress. In its coverage of the protest and the conversion attempt,the Dearborn Press &Guide, a local paper serving the Dearbornregion where many of the CU's members reside, quoted Shobe assaying that if CU members first vote to change the CU to a mutualbank and then participate in a subsequent stock offering, thiswould be the first time any had a chance to own the institution."Existing members would be able to purchase initial stock in thecompany if they choose to," the paper quotes Shobe as saying. "Thiswould be the first time that any members have had the opportunityto have financial ownership in the company." The CU has not yetreplied as to whether the paper quoted Shobe accurately, but Blohmand other supports of the Owners United group said they believed hehad been quoted correctly and that the quote fit into theleadership's overall effort to confuse members about the conversionand make them forget that they are part of a credit union. "Whyshouldn't you vote to give up something that you don't reallyunderstand the worth of owning?" Blohm questioned tartly. Moreadvertising from the group is likely to stoke the fire. As of presstime, 200 DFCU members signed an advertisement against the creditunion's proposed bank conversion that ran in local papers. Leadingthe signatories were six of the credit union's former board membersand executives, including Ron Unger, DFCU's CEO prior to Shobe.Unlike previous advertising, which urged DFCU members to questionthe conversion, this notice came out fully against it. "We aremember-owners of DFCU Financial who are AGAINST the proposedconversion to a mutual savings bank," the ad read. "We see nobenefit to members! It appears that it is only executivemanagement, board directors and supervisory committee members whowould benefit. Don't let this happen to OUR credit union!" TheOwners United group believes that most DFCU members were aware ofwhat they were joining when they made the decision to join a creditunion and that they want it to remain a credit union, Blohmexplained. "The number of signatories represents merely theearliest wave of our support," she added. Lost Branches And ATMs?The chance irate members will support the conversion move droppedstill further after it became clear that, should the former CUissue stock, as the CU leadership has said it will, the former CU'smembers, now customers, will lose their ability to use sharedbranches attached to the Service Centers Corporation. SCC is asubsidiary of the Ontario, California-based CO-OP Network and thebylaws of the CO-OP allow for credit unions, which convert tomutual banks to continue to participate as issuing institutions inshared branching and surcharge-free ATMs. But once the formercredit unions issue stock, they can no longer continueparticipating, according to CO-OP CEO Stan Hollen. This factappeared to cast doubt on DFCU's statements in its disclosuredocuments where the CU told its members that it is "seeking theapprovals necessary" to offer shared branching after theconversion. However, while Hollen declined to comment on what DFCUhas said or what possible negotiations the credit union could open,he reaffirmed the organization's bylaw rule against participationonce stock has been issued. DFCU Financial has seven branches ofits own and at least 10 shared branches within 10 miles of thecredit union. According to the credit union service centers Website, there are 58 shared branching outlets available statewide.CO-OP's Web site shows that there are 100 CO-OP Network ATMs within50 miles of DFCU. Fifty-two of these accept deposits, CO-OP said.Currently, the credit union offers members 36 of its own ATMs. "Ithink this is a significant material discrepancy in DFCU'sdisclosures that helps highlight the continuing problem with thedisclosure and balloting process in these conversion votes," saidDavid Adams, CEO of the Michigan Credit Union League and a leadingcritic of some things the CU has done as it proposed and supportedthe bank conversion. "Can you imagine the furor if, say, Bank ofAmerica wrote its customers about a pending legal change which thebank said won't make any difference except that it will drasticallyreduce the number of surcharge free ATMs that would be available tothem," he asked. "Could the bank get away with that?" The CO-OP'sbylaws currently allow a former credit union, which becomes amutual bank, to remain members in both the ATM and shared branchingnetwork as a participant as long as the former credit union doesnot issue stock. Throw The Board Out? Member dissatisfactionreached a high enough level by April 1 that the DFCU Owners Unitedgroup decided to mount a petition drive to try to remove the creditunion's board. "We distributed the petition forms and anticipatestarting to collect the signatures this week," said Blohm. "Wedon't anticipate having a lot of trouble reaching the 500 memberswe need for the special meeting." If the members group is able tocollect the signatures quickly enough it would be theoreticallypossible for the members to call for a special meeting to considerousting the board before the special meeting on the charterconversion proposal, but the actual scheduling of the meeting wouldremain up to the CU, which could delay it. Blohm said requestsamong the group's members and people that were becoming newly awareof the conversion issue led to the petition drive. "We had peopleasking at our meetings why we weren't holding a special meeting andgetting rid of the board," Blohm said, "so we felt like we had todo it." The root of the petition is member dissatisfaction with theamount of information the credit union has provided about theconversion, and the inability to get access to the minutes from aDFCU Financial board meeting where the merger was discussed."Specifically, the members requested to inspect the portions of theminutes of the Board of Directors for those meetings in which theconversion was discussed," the petition language noted."Additionally, the members requested to inspect reports, studies,graphical presentations, and all other documents in which there wasdiscussion and/or analysis concerning the proposed conversion .except for limited inspection of the minutes, the request wassummarily denied." The petition also quoted NCUA's letter to theSupervisory Committee outlining the need to make information aboutthe conversion available to members. The credit union leadershiphas not yet commented on the petition drive. Although the creditunion has not been reaching out to unhappy members, the Coalitionfor Credit Union Charter Options, the banker led group formed tofurther credit unions converting to banks, has been making aneffort. The group tried to address the April 4 DFCU Owners Unitedmeeting but was not given space on the agenda to speak. CCUCO sentits membership director and spokesman, Marvin Umholz, to attend themeeting to try to address some of what the CCUCO maintains areerrors on the group's Web site. But group organizers said that themeeting agenda was already full and that he was not free to come into distribute literature in favor of bank conversions. Umholtz saidthat he talked to some group members outside and that most werecordial but that some were verbally abusive towards him. Hecontended that the 50-65 people he saw attend the meeting werelooking "to turn the clock back to 1950" and that "it hasn't been1950 in a long time." Umholz also revealed that he has taken apersonal stake in the credit union's conversion effort by becominga member of the institution. He said he had not joined the creditunion in time to be a member of record for the credit union'sballoting but that, should the members approve the conversion, heshould be a member of record in time to take part in whatever stockoffering the former CU turned bank might want to hold. "I haven'tdecided whether or not I will do that, but I might," Umholtz said.He said he joined the credit union by joining a foundation but saidhe couldn't recall what the name of it was. Members of the DFCUOwners United organization have contended that financialspeculators have been joining the credit union by making donationsto the Judson Center, an effort to help abused and neglectedchildren in Southeastern Michigan. The credit union has not yetcommented on whether that membership avenue exists or [email protected]