Decision relative to the application of Lowell Postal Employees Credit Union to close its branch office At Two Washington Square, Haverhill, Massachusetts
By the Division of Banks
Pursuant to the provisions of General Laws chapter 171, section 8 and administrative procedures of the Division of Banks (the "Division"), the Lowell Postal Employees Credit Union (the "Credit Union" or "Lowell Postal"), Lowell, Massachusetts has petitioned the Division for permission to close its branch office located at 2 Washington Square (the "Haverhill Branch"), Haverhill, Massachusetts. This site is the only branch office of Lowell Postal. The Haverhill branch is located within the Haverhill Post Office and was formerly the office of the Haverhill Postal Employees Credit Union ("Haverhill Postal"). The reasons for the proposed closing are set out in the Lowell Postal's application which was filed in September of 1995. Opponents challenged the application on various grounds.
The initial public comment period on the application ended on October 17, 1995. During the open comment period the Division received statements and petitions opposed to the proposed closing. As a result of the significant opposition and issues raised, the Division ordered a public hearing so that it could receive additional testimony on the issues raised. The hearing was held on Tuesday, November 28, 1995 in the auditorium at Haverhill City Hall.
The Division scheduled the hearing at 5:00 P.M. and in Haverhill for the convenience of those most impacted by the proposed closing, the postal employees and retirees in Haverhill. For just over two hours, the Division took oral testimony from the Credit Union and opponents to the pending application. In total, twenty-one individuals made public statements. The Division asked questions of certain individuals who testified in order to receive additional information and facts on the record of this matter. By direction of the Division the supplemental comment period after the hearing was extended to December 20, 1995 due to delays in producing copies of the tape of the hearing. Additional comments have been received in writing during the supplemental filing period. All of this information has provided the Division with an ample record on which to review the application to close the Haverhill Branch of the Credit Union.
The decision to close a branch office is made initially by a credit union. If the credit union is chartered by the Commonwealth, as is the Credit Union, it must seek the approval of this Division under a procedure detailed herein and consistent with the applicable statute. In deciding upon an application to close a branch office, the Commissioner reviews all pertinent information to determine that the area served by the branch office will not be adversely affected by the transaction. The statute further states that, in addition to other factors, the availability of credit as well as the convenience and necessity of deposit service must be considered. In rendering a decision, the Division attempts to balance the needs of the petitioning financial institution and the customers and community being served by the branch office. In making a decision, the Division looks to see not only that all financial and statutory requirements are met, but also that adequate banking facilities and services remain available to the customers.
Information submitted with the application reflects that as of July 31, 1995, the Credit Union had assets of approximately $2,500,000.00. It serves its membership from its main office in Lowell and the Haverhill branch. Its field of membership, in general, is limited to postal employees and their families. The Credit Union's deposits and shares are insured by the National Credit Union Administration Share Insurance Fund. The Credit Union is in compliance with the Community Reinvestment Act ("CRA"), section 14 of chapter 167 of the General Laws. Its most recent record of performance under CRA received a public rating of Satisfactory.
The Haverhill Branch is located in downtown Haverhill and banking offices of other financial institutions and credit unions are located within the area. It is twenty miles from the main office of the Credit Union. As stated in the application, it is serviced by one employee and is open on Mondays, Wednesdays and Fridays from 8:30 A.M. to 10:30 A.M. The Credit Union had previously reduced the staff from five employees to one and reduced operating hours from twelve to the six cited. It currently offers limited services such as receipt of deposits and loan payments while other transactions and loan applications are processed at the main office. The Haverhill Branch holds no cash so withdrawals are paid by check.
The Haverhill Branch became an office of the Credit Union on February 1, 1994. Although often referred to as such at the public hearing, it did not occur as the result of Haverhill Postal merging with and into the Credit Union. At the time of the transaction Haverhill Postal was under the control and possession of the Massachusetts Credit Union Share Insurance Corporation (the "Corporation") pursuant to regulatory action taken by the Division on December 17, 1993. (See letter attached as Appendix A). As described in the attached letter, that action was taken as a result of federal law which prohibited the use of the mails or any instrumentality of interstate commerce for any depository institution, including a credit union, which was not federally insured. These prohibitions would substantially undermine a financial institution's ability to transact the business for which it was organized. Haverhill Postal's application for such federal insurance had been denied by the National Credit Union Administration ("NCUA") on June 10, 1993 (See letter attached as Appendix B). Reconsideration of that decision was also denied by the NCUA on July 28, 1993 (See letter attached as Appendix C). It was the position of the Division that any credit union which could not qualify for federal insurance was in an unsafe and unsound condition. To resolve this untenable situation the Corporation entered into an agreement whereby the Credit Union would purchase the assets and assume the liabilities of Haverhill Postal. At year end 1993 total assets of Haverhill Postal were approximately $912,000.00. That transaction which resulted in the maintenance of Haverhill Postal's main office as the Haverhill Branch of the Credit Union, was approved by the Division on January 27, 1994 (See letter attached as Appendix D).
The Credit Union's reasons for seeking to close the Haverhill Branch are cited in the record of this application. The expenses of operation are primarily noted. Additionally, the lack of transactions in conjunction with a reduction in the number of members employed at the Haverhill Post Office have caused the Credit Union, according to its statements, to submit this application. At the public hearing several directors explained their extended analysis and discussion of this proposal and their determination that it would be in the best interests of the Credit Union. Moreover, in their various testimony, the directors offered that recent implementation of additional services such as ATM cards and a no fee checking account were considered as minimizing any inconvenience to members working in the Haverhill Post Office. The Credit Union has also noted that most industrial credit unions serve their members from a single office.
The members of the Credit Union served by the Haverhill Branch stated numerous reasons for their opposition to the proposed closing. It was offered that the loss of direct personnel contact with the Credit Union within their own building would result in complete alienation and lead to less transactions by members. The inconvenience of going to the main office in Lowell with the attendant costs of time and travel would be significant it was stated. The availability of ATM cards and a no fee checking account did not, in their view, offset the inconvenience factor. It was also particularly noted that the closing of the Haverhill Branch would eliminate the remaining physical tie to the former Haverhill Postal and many opponents had understood at the time of the transaction with the Credit Union that a commitment had been made for the continued maintenance of a branch office within the Haverhill Post Office.
Objections were also raised to the Credit Union's arguments that the expenses related to operating the Haverhill Branch necessitated the closing. The Credit Union's "losses" at the Haverhill Branch were disputed on several bases and primarily that such figures did not reflect current loan transactions since they are booked at the main office in Lowell. Moreover, arguments were made that continued and ongoing earnings from the acquired assets of Haverhill Postal should be considered in the overall financial analysis of the Haverhill Branch as well as the significant reserve accounts which were also acquired.
Another line of objections focused on the lack of notice from the Credit Union to members served by the Haverhill Branch on its consideration to closing the office. Such failure to communicate with members previously served by Haverhill Postal on this and other matters was cited as a reason for the loss of membership in Haverhill and the resulting reduction in transactions. Concerns were expressed that options other than closure were not discussed with the members served by the Haverhill Branch.
The Division has reviewed at length the extended record on this matter. That review has also noted that several of the inquiries raised by those opposing the closure are responded to in the public file. Other aspects of contention may be answered by the explanation of the transaction between the Credit Union and the Corporation concerning the assets and liabilities of Haverhill Postal. That transaction, which was not a merger, and the prior transfer of control of Haverhill Postal to the Corporation were further explained at the public hearing.
It is clear to the Division, however, that despite the common bond of employment by the post office, the former members of Haverhill Postal have not been easily assimilated into Lowell Postal. The reduction in members resulting in less accounts and fewer transactions as well as testimony on limited, if any, participation in shareholder meetings or on the board of Lowell Postal reflect that fact. In that sense, complete closing of the physical location in the Haverhill Post Office is viewed as the end of Haverhill Postal although that occurred approximately two years ago. It is not clear to the Division whether the lack of support for Lowell Postal by members in Haverhill is based on the transaction, the lack of communication or the reduction in services as well as hours and staff at the Haverhill Branch. The record reflects that Lowell Postal believes the lack of support for the Haverhill Branch and the Credit Union itself, as set out herein and in the full record, weigh in favor of their action to seek its closure.
Upon review of the entire record of this matter and with consideration given to the regulatory action taken relative Haverhill Postal, the Division is deferring action on this application for approximately six months until August 2, 1996. During this period, the Credit Union must take all of the following actions:
- It must maintain, at a minimum, the current hours and days of operation of the Haverhill Branch.
- It must take such actions as it deems appropriate to notify postal employees which would be served by the Haverhill Branch of their eligibility for membership in the Credit Union and document all actions to increase such membership.
- It shall identify and communicate with existing members serviced by the Haverhill Branch to ascertain what, if any, additional services should be provided at that location.
- The Credit Union shall make available a list of the names of current members who were previously members of Haverhill Postal to any current member who seeks such list and the Credit Union determines that the individual is not seeking the list for the purpose of selling it or for using it for any purpose other than in the interests of the Credit Union.
A copy of that list is to be prepared immediately and available for examiner review. All actions, including mailings, notices and documents of any kind, taken or issued relative to increasing membership served by the Haverhill Branch shall also be submitted, in duplicate, to the Division. All such submissions are to include a breakdown of costs or a detailed estimate of expenses related to the action taken.
After the close of business on August 2, 1996, the Credit Union shall submit, in writing, a letter informing the Division of its intent to maintain the Haverhill Branch or a renewed request that it may be closed. If the submission seeks the authority to close the Haverhill Branch, the Credit Union should update the reasons for that decision and include a listing of all actions taken, with related costs to increase membership and transactions at the Haverhill Branch. The submission must also contain updated information and analysis of any losses calculated as directly and solely attributable to operation of the Haverhill Branch. If, upon review of a renewed request for closure, and any other information which the Division deems necessary, the Division determines that the efforts of the Credit Union to increase membership served at the Haverhill Branch have been significant and that such efforts have not resulted in increased membership or transactions, it may authorize the Credit Union to close the Haverhill Branch after August 2, 1996 without any other proceeding or filing.
The Division hopes that the postal employees served by or eligible to be members of the Credit Union take the opportunity presented by this deferral to provide support for the Haverhill Branch or other options which would allow them to continue as active shareholders with a common bond. That goal on its face should have allowed for a smooth integration of Haverhill Postal's membership with Lowell Postal particularly in light of the maintenance of the Haverhill Branch. The necessity to take the regulatory action described herein and at the public hearing may have complicated that integration within the relatively short time period involved from the transaction to the filing of this application. The opportunity to testify at the public hearing and the willingness of individuals to publically speak of their experiences with Haverhill Postal as well as their desire to maintain the benefits provided by the credit union movement may now allow people to move on from the events of two years ago. The necessity to obtain federal insurance as required by federal law impacted numerous state-chartered credit unions. Those credit unions genuinely believed that they continued to operate consistent with their mission of providing deposit and credit services at low costs to individuals who were often their co-workers or neighbors. The former Board of Haverhill Postal can take pride in the fact that they too had continued that tradition which began with its incorporation in 1929. Events of the early 1990's, including the requirement to obtain federal insurance, brought with it requirements of federal law and various federal agencies. The result was significant changes in the ongoing operations of credit unions and an individual credit union's control and timing of those required actions. From the commencement on January 1, 1991 of the effort to obtain federal insurance for state-chartered credit unions until its completion in early 1994, the number of state-chartered credit unions decreased from 181 to 136. Although not all actions were directly related to the federal insurance requirement, it affected many.
In the two years since the completion of the insurance issue, another eleven credit unions have left the state system. Individuals committed to the credit union movement and its many benefits must remain active members and encourage other eligible people to join. Postal employees in Haverhill, Newburyport and Amesbury previously served by Haverhill Postal have the following six months to weigh the value of such membership. Lowell Postal also has the challenge to evidence its willingness to actively reach out and provide necessary services to all individuals within its common bond.
Based upon the authority set out in General Laws chapter 171, section 8, the application of Lowell Postal Employees Credit Union to close its branch office at 2 Washington Square, Room 206, Haverhill, Massachusetts is hereby deferred until after August 2, 1996.
| October 23, 1996 Date | Thomas J. Curry Commissioner of Banks |