In a Rare Occurrence, Members Reject Virginia Merger

After the NCUA approves proposed credit union mergers every quarter, the vast majority of them also get a favorable majority vote from members required to complete the legal phase of a consolidation.

So when members of the $246 million InFirst Federal Credit Union in Alexandria, Va., rejected a proposed merger with the $468 million Arlington Community Federal Credit Union in Falls Church, Va., it was a very rare occurrence, an NCUA spokesperson confirmed.

InFirst President/CEO Martha Wye said she heard members express concerns during an Oct. 11th special meeting that they didn’t want to lose their identity with the credit union, and they didn’t want to go through the changes that inevitably happen post merger. However, members seemed to be especially worried about what could happen to their local branches.

Including its headquarters location, InFirst’s 62 employees operate eight branches that serve more than 15,000 members. Arlington Community’s 90 employees run four branches that serve more than 23,000 members.

“When Arlington Community FCU was approached by InFirst FCU to merge, we embraced the opportunity to support a credit union with which we have long collaborated and have great synergies,” Arlington Community President/CEO Karen Rosales said. “Martha Wye and I have worked in partnership as fellow CEOs in the Northern Virginia market for many years and agreed the merger would be positive for our members, teams and communities.”

However, some InFirst members were not so positive about the proposed deal.

They were concerned regarding the wording in the merger documents filed with the NCUA that stated InFirst’s branches would remain open for “at least one year after the consolidation date.” Apparently, Wye indicated, members were worried whether that meant the branches could be closed after one year, even though Rosales assured members the branches would remain open.

“Arlington Community FCU was excited to welcome InFirst’s wonderful staff, expand our branch network and serve members in new communities,” Rosales said. “Arlington Community FCU was firmly committed to maintaining the branch network, retaining all staff positions, and creating new opportunities for growth and expansion for the combined staff and membership.”

In addition to offering jobs to all InFirst employees, the five most highly compensated employees would receive compensation of not more than 10% of their base salaries, according to the credit union’s merger documents filed with the NCUA.

From some of the members who attended the special meeting, Wye said she also heard that they didn’t want to lose the identity with their credit union’s affiliation with the federal government.

“We’ve been around for almost 88 years. And we were originally chartered with the Civil Service Commission. We now serve the Office of Personnel Management in Washington, D.C. as well as the Federal Communications Commission, Federal Trade Commission … etcetera,” Wye explained. “But last year we had a merger with FedStar, and they’re out in Salem and Roanoke, Va. And they didn’t want change. They didn’t want their account numbers to change another time [because] they were just getting over the merger. We also support one of our select employee groups called National Active and Retired Federal Employees. They didn’t want to change.”

Wye did not disclose the results of the InFirst member vote when requested by CU Times.

At the special meeting, Rosales said she heard InFirst’s members express their desire to maintain their credit union’s identity and preserve a smaller, more intimate approach to service.

“We have deep respect for the democratic process of the member vote and will continue to support InFirst as they pursue a different path,” she said.

In an InFirst newsletter, Wye wrote that the eloquent and passionate comments and questions from members reminded everyone in attendance at the special meeting about “why we needed to preserve our heritage by not merging.”

While Wye also noted that members want their credit union to remain small and community oriented, she also asked members to keep InFirst top of mind for their financial needs.

“We need every member to engage with us for our credit union to thrive,” she wrote.

Wye said she hopes to retire by the end of this year while the board conducts a search for her successor.