Merger to dissolve Auburn corporate credit union
Long held back by legislative restrictions, the nation's oldest corporate credit union, based in Auburn, has plans to merge with a larger counterpart based in Albany, N.Y.
Central Credit Union Fund Inc. was formed by an act of the Massachusetts Legislature during the depression in 1932 to provide liquidity back up to the state's credit unions. However, it was that act of the legislature that eventually held the organization back from growing, and which led to the organization's probable demise through a merger with Members United Corporate Federal Credit Union.
The merger between the Central and Members United has already passed several hurdles. First the deal was approved 73-to-15 by Central's voting members at a June 12 meeting. More recently, the deal was approved by the state Division of Banks on July 18.
Historical significance
While decisions issued by the Division of Banks are usually dry, its decision on the Central-Members United merger gives a nod to Central's place in history.
"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 decision states.
The last hurdle for the merger is approval from the National Credit Union Association, which is not expected until November. Once the merger is official, members of Central - and their deposits - will be transferred automatically to Members United.
James Van Arsdale, president and CEO of Central, said he and at least five of the corporate credit union's nine current employees will remain on staff after the merger. He also said it would retain its office in Auburn at least through the middle of next year.
The need for the merger was driven by changes in the marketplace, according to Van Arsdale.
Too little, too late
Under the original state law in 1932, Central was only to operate for five years, but its existence was extended by legislation several times, until it was made permanent in 1959.
It wasn't until a law was passed last year that Central was given the legal flexibility to pursue a more aggressive business strategy.
"We installed and converted to new technology platforms, added new staff and committed funding to training and development...The strategy was working, but it wasn't the quantum improvement that our board desired," he said.
So, Central decided to pursue a merger with Members United, which itself is the product of a merger between Mid-States Corporate Federal Credit Union and Empire Corporate Credit Union. Members has $13 billion in assets.
The merger with the larger Members United could present added competition for the state's other corporate credit union, EasCorp. (Eastern Corporate Federal Credit Union), which is based in Burlington. EasCorp. is a federally chartered corporate credit union founded 29 years ago that had accumulated $1.8 billion in assets and more than 250 member credit unions as of May 2007. By contrast, Central only had $256.2 million in total assets in May, a 24 percent drop from the $335 million in assets it reported in May 2003.
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