In May 2023, a group of 15 BHFCU members sued their credit union to block its proposed consolidation with the $321 million MyUSA Credit Union also based in Middletown. The group alleged that the merger violated the credit union’s charter and federal regulations. A month later, an Ohio Magistrate Judge granted a group of 15 members a preliminary injunction that blocked and forced the cancellation of the consolidation, even after the NCUA's conditional approval and after the majority of BHFCU members voted in favor of merging with MyUSA.

What's more, last January, a state judge granted the 15 members a default judgement, which means they won their case outright.

The case is now in a discovery stage and is expected to go into mediation that may result in an agreement to settle the case.

“Over the last two and a half years we members have begged NCUA multiple times to do something about this negligent board of directors. NCUA ignored us all of that time, which allowed the membership and assets to decline,” Steve Snider and Kathy Wright said in a prepared statement. “None of that had to happen if NCUA had acted on information and facts we sent them in writing and know they were aware of.”

Snider and Wright are two of the 15 BHFCU members who have been involved in the lawsuit.

CU Times published a three-part series that reveals the inside story about how the BHFCU members successfully blocked the consolidation, repeatedly voiced their concerns about the credit union with the NCUA, and questioned why the federal agency did not act earlier to conserve BHFCU to appoint a turnaround CEO and a new board, which may have returned the financial cooperative to viability.

Based on their evaluation, the NCUA examiners determined in 2021 that BHFCU’s CAMEL composite rating to be 4, which was the same rating the Ohio credit union received during a prior examination. The composite ratings are based on 1, which is the best rating, and 5, which is the worst rating, based on an NCUA’s examiner’s assessment of the credit union’s Capital Adequacy, Asset Quality, Management, Earnings and Liquidity/Asset-Liability Management or CAMEL.

Because BHFCU failed to address its problems identified by the NCUA well before 2021, the federal agency recommended that the credit union merge.

Over the years the NCUA, on occasion, has conserved other small credit unions for unsafe and unsound practices but were not consolidated.

In June 2020, for example, the NCUA conserved the $30 million Southern Pine Credit Union in Valdosta, Ga., for unsafe and unsound conditions. By March 2022, the federal agency released the credit union from conservatorship, but it wasn’t until June of that year when the CU Times first reported Southern Pine was conserved because of a $5.4 million embezzlement scheme carried out for years by its former CEO and controller.