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The petition of Members United Corporate Federal Credit Union ("Members United"), Warrenville, Illinois to merge with the Central Credit Union Fund, Inc. (the "Central Fund"), Auburn, Massachusetts has been reviewed by the Division of Banks (the "Division"). The Central Fund and Members United are corporate credit unions which provide various services to other credit unions. The deposits of both credit unions are insured by the National Credit Union Share Insurance Fund. Members's United is the resulting entity from the merger of two corporate credit unions on July 1, 2006. As described herein, the Central Fund has been providing for the liquidity needs of its member credit unions since 1932.
Under the terms of the merger, the Central Fund will merge with and into Members United under the charter, by-laws and name of Members United Corporate Federal Credit Union. The main office of Members United will remain the main office of the continuing credit union while the sole office in the Commonwealth of the Central Fund will be retained as an office of Members United. The statutory requirements relative to the application were met including a favorable vote of at least two-thirds of members present at the Special Meeting of the Central Fund (the "Special Meeting") held on June 12, 2007. Specifically, 89 members of the Central Fund were present at the Special Meeting with 73 members voting in favor of the merger and 15 members voting against the merger. One member abstained from voting on the proposed transaction.
Notice of the application has been posted on the Central Fund's website and published in the Division's monthly Activity Report. The time period for interested parties to submit comments ended on July 11, 2007. Accordingly, all documents and materials related to this transaction have been reviewed. The record of the proposed transaction has been considered with regard to the financial and managerial resources of each credit union, the competitive effects of the proposed transaction, the interests of the members of each credit union, the future prospects of the institutions and the convenience and needs to be served by the consolidated entity. The application and related documents address each of these matters.
The Central Fund was established by Chapter 216 of the Acts of 1932 ("Chapter 216") as the first corporate credit union organized within the United States. In response to the Great Depression, three separate Special Acts became law in 1932 in the Commonwealth which created unique industry supported funds for Massachusetts chartered savings banks, co-operative banks and credit unions, all of which were in mutual form. The primary purpose of each fund was to provide cash or loans to the members in order for an institution to remain liquid during that difficult time in our country's history. Since that time, the Central Fund has operated to serve credit unions within the Commonwealth of Massachusetts. Among the services it now provides to its members are lines of credit, wire transfers, as well as a variety of other liquidity services, membership share services, correspondent services, fund transfer services, investment and other related services. Under the 1932 Act, the Central Fund was to operate for only five years and then be liquidated under the direction of the Commissioner of Banks. The operation of the Central Fund was extended by law several times until made permanent in 1959.
The authority for the merger of two corporate credit unions such as the Central Fund and Members United was established by Section 2 of Chapter 277 of the Acts of 2006. In addition to providing such authority and procedural requirements for such mergers, Section 2 of said Chapter 277 specified procedures for the liquidation of the Central Fund. Both such authorities were added as Section 8 of said Chapter 216. Section 1 of said Chapter 277, which became effective on November 28, 2006, also authorized the Central Fund to expand the services that it could provide to its members. The Division supported these very separate and distinct purposes of said Chapter 277 which gave the Board of Directors and the members of the Central Fund several options to consider for its future.
Based upon the Division's review of the application filed and related documents and in accordance with the recently passed statute, approval is granted for the consolidation of the Central Credit Union Fund, Inc. with and into Members United Corporate Federal Credit Union. Upon receipt of the enclosed certificates signed by the Presidents and Clerks or other duly authorized officers of each credit union indicating that all applicable requirements have been fulfilled, final regulatory approval will be given thereby making this consolidation effective, subject only to the requirement that Articles of Merger with my endorsement thereon are filed with the Secretary of State in accordance with said Section 8 of said Chapter 216.
Upon consummation of the merger, the charter of the Central Fund will cease to exist and all of the rights, privileges, powers, franchises, properties, assets, liabilities and obligations of the Central Fund shall be vested in and assumed by Members United. Accordingly, members of the Central Fund without any additional action, shall become members of Members United upon consummation of the merger.
The Division recognizes that the borrowing permits held by state-chartered credit unions for the Central Fund pursuant to section 73 of chapter 171 of the General Laws will also be transferred to Members United upon consummation of the merger. A Massachusetts chartered credit union which is not currently a member of the Central Fund will be able to apply to become a member of Members United and apply for a permit to borrow from Members United under existing provisions of the General Laws.
As noted above, the Division supported amending Chapter 216 of the Acts of 1932 last year to provide necessary statutory authorities for the Central Fund to determine its future. The Board of Directors and the membership of the Central Fund in their definitive vote of 80% in favor of the merger, have determined that they will be better served as members of Members United. It also reflects that credit unions now have available to them the services of other entities that did not exist in 1932. The decisions of the Board of Directors and the credit union membership of the Central Fund follow one of the options granted to them by the recent amendments to Chapter 216 of the Acts of 1932.
The Division acknowledges the fine work of the many men and women who have served as Directors of the Central Credit Union Fund, Inc. over these many years and provided strong, capable and professional management of an entity with a dedicated mission to serve credit unions for the benefit of the citizens of the Commonwealth. The significant duties of the Central Credit Union Fund, Inc. will be completed with the consummation of the merger.
July 18, 2007
Steven L. Antonakes
Commissioner of Banks