Decision Upholds Charter Choice
In a significant victory for mutuals, a federal magistrate will recommend that the NCUA be required to allow Community Credit Union to convert to a mutual bank. The judge found that CCU had followed the NCUA’s rules regarding conversion and called the NCUA’s actions "arbitrary and capricious," the same language used in ACB’s brief filed in support of the credit union.

ACB continues to work for passage of H.R. 3206, the Credit Union Charter Choice Act 0f 2005. The bill would add certainty to the conversion process, reduce unnecessary costs and allow credit unions to communicate freely and accurately about conversions. Click here to send a letter urging your Representative to support the bill.

New Jersey Legislator Plans to Introduce CU Conversion Bill
A bill designed to allow state-chartered credit unions to convert to mutual banks is being prepared by N.J. State Senator Peter Inverso. The bill is slated to be introduced next month and would correct an oversight in the state code by allowing state-chartered credit unions the option to change charters if the majority of voting members approve.

Mutual Banks Involved in Mutual-to-Mutual Combinations
A mutual-to-mutual combination between Salem Five Cents Savings Bank and Heritage Co-operative Bank was announced last week. The merger will occur as Salem Five Cents moves ahead with its reorganization to a mutual holding company which will be known as Salem Five Bancorp.

In Philadelphia, Beneficial Savings Bank is expected to close a deal with Northwood Savings Bank early next quarter. Beneficial is seeking to acquire small institutions in the Philadelphia metro area. Northwood, with $9.2 million in assets, suggested the deal as it stated that compliance costs associated with the Patriot Act and Bank Secrecy Act would sharply cut its profits.

The mergers or acquisitions are currently accounted for as pooling-of-interest transactions and no cash or stock will be exchanged. The deadline for comments on FASB’s Exposure Draft on Business Combinations is October 28. The proposed changes will eliminate the pooling method of accounting for the merger of mutual institutions. Please email ACB’s Charlotte Bahin at [email protected] with your comments on this issue. Click here for FASB’s Exposure Draft.