Members of the $371 million Fort Financial Federal Credit Union rejected a proposed merger with the $655 million INOVA Federal Credit Union, halting a plan to create a billion-dollar financial cooperative in Indiana.
According to The Journal Gazette, Fort Financial said Monday that the member vote concluded (on Jan. 26) and that it would continue "operating independently and move forward with its existing strategic plan."
The Fort-Wayne based Fort Financial and Elkhart-based INOVA did not respond to CU Times' phone and email requests for comment.
The proposed merger was publicly announced last August.
The Fort Financial Board of Directors said the consolidation would improve the financial strength of both institutions and reduce fees by more than $280,000 annually, including lowering nonsufficient funds fees and other relationship or balance fees. The board also said merging with INOVA would offer Fort Financial members a wider range of mortgage and business services, technology offerings and added savings options.
There were no merger-related financial arrangements for Fort Financial executives, according to its merger documents filed with the NCUA.
Five individuals submitted comments to the NCUA opposing the planned merger. Although six persons submitted comments in favor, one came from Fort Financial President/CEO Steve Collins and another from Fort Financial board member Bryan Sharp.
Fort Financial member Penny Johnson said she voted against the merger because she believed the promises of lower rates were unclear and unrealistic.
"The claim that the merged institution will be able to 'offer lower rates' is misleading. Loan rates are based on external factors such as the prime rate and internal factors such as risk-based pricing," Johnson wrote. "Unless these industry fundamentals change, it is unclear how the merged entity would realistically provide lower rates than what we already receive today. Members deserve transparency, not vague promises that contradict how lending actually works."
Mary Johnson, who voted in favor of the merger, acknowledged that loan rates are influenced by external and internal factors, but said the consolidation does not claim to eliminate those realities.
"Rather, the opportunity for more competitive pricing comes from greater scale and financial capacity, including stronger capital levels, broader loan portfolios and reduced per-member operating costs," Johnson wrote. "While no credit union can guarantee specific future rates, the merger is designed to improve the ability to compete on rates over time, not contradict how lending works."
Although it is a rare event when members turn down a proposed consolidation, it also occurred in Indiana in May 2024, when members of the $925 million Hoosier Hills Credit Union in Bedford voted against a proposed merger with the $2.3 billion Centra Credit Union in Columbus.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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