Columbia Chapter Meeting Rapt for Conversion Discussion

PORTLAND, Ore. – About 65 credit union executives listened closely on March 10 to a discussion of the issues involved in the credit union-to-bank conversion phenomenon at a meeting of the Columbia chapter of the Oregon Credit Union Association. Tony Ward-Smith, a noted credit union consultant, spoke about his experience as a member of the $619-million Columbia Credit Union, based in Vancouver, Washington. Columbia has been through a bruising fight with some of its members about an attempt to change its charter to that of a mutual bank. Ward-Smith was one of the Columbia members to object to the way the credit union had conducted the disclosures and vote. He was also one of the members to help organize Save CCU, the organization of Columbia members who are campaigning now to recall the credit union’s board in a special meeting on March 28. Contacted after the March 10 event, Ward-Smith said some of the discussion went to the specifics of Columbia situation, though much of it also centered on the broader issues as well. “The bigger issue is the overall implication for credit unions in general,” Ward-Smith said. “If the Columbia is right in what it claimed, then all credit unions are, essentially, out-of-date and out-of-business relative to today’s banking market. I don’t believe that and I have tons of data which proves the opposite. But the problem is – why are we, any of us, even thinking that?” Ward-Smith noted that while Columbia’s conversion might have been the result of a strategic plan put forth by the CEO, the directors had to be held responsible for going along with it. “Either the directors lost their way and lost their sense of purpose,” Ward-Smith said, or they didn’t really know what was going on or they were misinformed, misguided and mislead, or they were in a plan to make a little money, or all of the above, he added. “Here’s the true test,” Ward-Smith maintained. “If directors really believed that being a credit union was no longer viable, they still had a better option than the conversion. They could have sold the credit union to a bank. It’s very possible. And in today’s market, the sales price would be 1.5 times book. So CCU, with $60 million equity, would go for $90 mil. “Bylaws say this would divvy out to members based on their percentage of total deposits, so every member would get something out of the deal and still could continue to do banking there,” Ward-Smith continued. “The directors, of course, would be out of business, and wouldn’t cash in on any conversion windfall. But, that would, at least, be fair. Now, who wants to convert to a bank on those terms?” he asked. – [email protected]