DALLAS — Outside of Texas, it's been relatively quiet on the unsolicited credit union merger front.
Seven league boards have adopted resolutions outlining guidelines should a "hostile" merger attempt take place in their respective states. The resolutions don't carry any regulatory teeth, but at the very least put those on notice that certain untraditional merger strategies will not be tolerated.
So far, the Minnesota Credit Union Network, Association of Vermont Credit Unions, New York State Credit Union League, Wisconsin Credit Union League, Maryland and District of Columbia Credit Union Association, Michigan Credit Union League and the Texas Credit Union League have adopted resolutions.
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For the most part, the resolution states it is the right of a credit union's board after considering the best interests of the members, to approve or disapprove a merger proposal. Third parties, the resolution generally reads, cannot interfere in the business operations of a credit union nor are they entitled to provide "inaccurate or misleading" communications to the members of another credit union. Other provisions include the authority of one credit union to spend funds to influence member votes at another credit union being subject to "serious review" by regulators. The resolution also requests that until NCUA implements provisions, the agency would refrain from approving any application that resulted from a "hostile takeover"
The Texas league is the only one that has taken it a step further urging the Texas Credit Union Commission to take a more in-depth regulatory look. The commission recently proposed a rule that would prohibit a credit union from offering a merger inducement to another credit union's members as a means of promoting a merger of the two credit unions. The nine-member, governor-appointed advisory council is currently seeking comment on the proposal as an amendment to 7 TAC 91.1003. No word yet on the number of comment letters received since the proposal was introduced in late June. The commission is scheduled to meet again Oct. 19.
Meanwhile, the Association of Vermont Credit Unions has made the state's banking regulator aware of unsolicited mergers within the credit union industry. Joseph Bergeron, president/CEO of AVCU, said he has met with officials at the State of Vermont Department of Banking, Insurance, Securities & Health Care Administration to make them aware of "forced mergers."
"I've had some casual conversations with the regulator about [unsolicited mergers] and they are aware of it," Bergeron said, adding formal discussions have not been initiated on any legal ramifications.
Bergeron said the association's resolution was more of a "philosophical stance."
The Minnesota Credit Union Network, which was instrumental in working the American Association of Credit Union Leagues on drafting a resolution that all credit unions could use as a model, does not have any plans to make any regulatory moves, said Mark Cummins, president/CEO.
"The legislative session is over. We're not really at a point to go any further," Cummins said, but even when legislators return, there still "won't be a specific intent to do anything further."
The Wisconsin league just adopted its resolution a few weeks ago. Both New York State and Michigan leagues have also said there are no plans to go beyond the resolutions each has adopted.
"We haven't initiated any conversations with the state or federal regulator concerning hostile takeover attempts," said Dave Adams, president/CEO of the Michigan Credit Union League. "As a matter of record, we have sent a letter to NCUA [asking] they not
allow these kinds of unwanted takeover attempts to take place."
The Maryland and District of Columbia Credit Union Association said it will be watching Texas but there are no immediate plans to take a regulatory approach, said Michael Beall, president/CEO. There are nine state-chartered credit unions and roughly 111 federal credit unions in Maryland, he pointed out.
"We will be watching Texas and taking a closer look as what they're doing," Beall said. "We'll see if there is enough interest [in Maryland/D.C.] going forward."
Beall said Maryland's banking regulator commissioner, which also regulates state-chartered credit unions, is set to retire in August and the association has not had any conversations with the incoming regulator on unsolicited mergers.
NAFCU recently reiterated its stance calling for more regulatory protections, but also encouraged the continuance of voluntary mergers. CUNA has taken the same position, but has lately remained quiet on the issue. NCUA has consistently said that it will not consider a merger plan if an agreed-upon proposal is not submitted by all credit unions involved.
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