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Voices / Open Letter

Not in our best interest

In a proposed merger with Members Advantage Community Credit Union, River Valley Credit Union’s good name and member-owners’ local control would be exchanged for minority membership in a merged board of directors, discarding a long and proud history in southeastern Vermont

Howard Fairman is a member-owner of River Valley Credit Union; his piece is an open letter to other member-owners. Official financial results and member-owner counts cited below are provided by River Valley Credit Union and by U.S. National Credit Union Administration Call Reports, he notes.

Putney

The boards of directors of River Valley Credit Union (branches in Bellows Falls, Brattleboro, Putney, Springfield, and Townshend) and Members Advantage Community Credit Union (branches in Barre, South Burlington, Springfield, White River Junction, and Windsor) have proposed for their member-owners’ approval merging River Valley Credit Union into continuing Members Advantage Community Credit Union.

This proposed merger does not significantly benefit current and future River Valley Credit Union member-owners, instead giving away our local control.

River Valley Credit Union has 18,540 member-owners, while Members Advantage Community Credit Union has just 15,588 member-owners (as at March 31).

River Valley Credit Union’s new name, however, will be Members Advantage Community Credit Union.

And Members Advantage Community Credit Union’s new board of directors will include a minority of just six of River Valley Credit Union’s current directors versus a majority of seven of Members Advantage Community Credit Union’s current directors.

And River Valley Credit Union’s Main Office in Brattleboro will be closed, replaced by Members Advantage Community Credit Union’s Main Office in faraway Barre, 113 miles from Brattleboro (Boston is 107 miles from Brattleboro).

Both credit unions say they are in good financial shape: no rescue needed.

* * *

The purpose of a credit union is loaning grassroots member-owners’ deposits to fellow grassroots member-owners for routine financing of our homes, vehicles, etc.

River Valley Credit Union is very good at this. Members Advantage Community Credit Union is not.

Deposits (as of March 31): River Valley Credit Union, $117,303,824; Members Advantage Community Credit Union, $127,041,856.

Loans (as of March 31): River Valley Credit Union, $108,487,432; Members Advantage Community Credit Union, $61,866,917.

River Valley Credit Union has loaned to its member-owners 1.75 times more member-owners’ deposits than Members Advantage Community Credit Union has loaned to its member-owners.

Eighty-seven percent of this $46,620,515 difference is first-mortgage loans. River Valley Credit Union has loaned 3 times more to finance member-owners’ largest and most important lifetime purchases.

Conversely, Members Advantage Community Credit Union’s investments total $52,444,224 (including deposits in commercial banks, S&Ls, savings banks: $40,516,000; loans to and investments in natural-person credit unions: $11,353,170). River Valley Credit Union’s investments total just $346,600 (as of March 31, 2020).

Managing member-owners’ deposits very differently, Members Advantage Community Credit Union’s majority of its merged board of directors can be expected to increase former River Valley Credit Union’s investments by decreasing its lending: defeating the purpose of a credit union.

Or are continuing River Valley Credit Union minority directors and management to show continuing Members Advantage Community Credit Union majority directors and management how to do much better at lending member-owners’ deposits to fellow member-owners?

If so, this is what consultants do for fees — not by exchanging River Valley Credit Union’s good name and member-owners’ local control for minority membership in a merged board of directors, discarding our proud history in Southeastern Vermont since 1946.

There also is no significant benefit to current and future River Valley Credit Union member-owners from adding branches in faraway Barre, South Burlington, White River Junction and Windsor.

Instead of merging for “growth,” River Valley Credit Union’s board of directors and management should plan and open new branches within Southeastern Vermont serving current and attracting new member-owners in towns such as Chester, Dover, Grafton, Jamaica, Londonderry, Marlboro, Newfane, Stratton, Weston, Whitingham and Wilmington.

How about a mobile branch visiting towns to test markets for new branches and serve towns that are too small for a branch?

* * *

I am respectfully requesting that a copy of this dissenting member-owner’s open letter to fellow member-owners be mailed with each ballot, if there is a ballot.

The chairperson of River Valley Credit Union’s board of directors wrote to member-owners (July 1): “After we obtain preliminary approval from the State of Vermont Department of Financial Regulation, you will receive notification of a membership meeting, where a more detailed discussion of the merger proposal will take place, followed by a membership vote.”

Regarding membership meetings:

• The River Valley Credit Union Charter and By-Laws state: “Except as hereinafter provided, at annual or special meetings 15 members shall constitute a quorum” (River Valley Credit Union Charter and By-Laws, Article 5: Meetings of Members, Section 5).

• As few as eight of an actual majority of 9,293 among 18,585 River Valley Credit Union member-owners (as of June 30) can decide our credit union’s future.

• Each River Valley Credit Union member-owner has the right under Vermont law to vote for or against this proposed merger.

* * *

A membership meeting of any significant number among River Valley Credit Union’s 18,585 member-owners is impossible in-person, regardless of the ongoing coronavirus pandemic, or online.

Online voting is not an alternative, because it is easily and undetectably tampered. Only 6,468 River Valley Credit Union member-owners have chosen to do their banking online (as of June 30), and those member-owners who do not employ or cannot access the Internet cannot be denied their statutory rights to vote.

The only fair and equitable means for all 18,585 member-owners of River Valley Credit Union to exercise their statutory rights to approve or disapprove this proposed merger of River Valley Credit Union into continuing Members Advantage Community Credit Union is via ballots mailed to every River Valley Credit Union member-owner for voting, signing, and mailing postpaid to an independent local accounting or law firm retained and paid by the River Valley Credit Union Supervisory Committee for third-party ballot counting and result certification.

On behalf of 18,585 River Valley Credit Union member-owners, I have respectfully requested written confirmation by our River Valley Credit Union board of directors that River Valley Credit Union member-owners’ voting to approve or disapprove our board of directors’ proposed merger of our River Valley Credit Union into continuing Members Advantage Community Credit Union will be organized and conducted as stated by the preceding paragraph of this open letter.

If our board of directors say no, we must take emergency legal action in Vermont Superior Court, Windham Civil Division, to uphold and affirm our statutory voting rights.

In that case, we will be up against prominent local attorneys who are directors of River Valley Credit Union.

For member-owners, our only hope then to beat winning through intimidation will be to create intimidation through winning.

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Originally published in The Commons issue #570 (Wednesday, July 15, 2020). This story appeared on page B3.

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