Thomas Faulkner
Montagues and Capulets. Cats and dogs. Banks and credit unions. They just don’t like each other.
But every once and a while you get Romeo and Juliet, or Milo and Otis.
And now we have Haverhill Bank and Northeast Community Credit Union (NCCU), whose romance was finalized Nov. 20 when the state’s Division of Banks authorized a merger between the two.
It is the first merger of a credit union and a bank in the history of Massachusetts. It’s only the third time since 1995 that the phenomenon has happened nationally.
Like most marriages, the merger was the result of common interests.
“We’re both mutual institutions, and we’re both in the same community,” said Thomas Faulkner, president of Haverhill Bank. “There is an incredible amount of compatibility. We’re competing with each other, and incurring the same expenses.”
Together, the banks will form a single institution called Haverhill Bank with approximately $260 million in assets, $188 million in loans and 19,000 customers.
Faulkner said it all began when one of his directors made a casual comment about getting together to Peter DiBendetto, CEO and treasurer of NCCU, which elicited a friendly response.
“My director reported back to me, and I looked up their financials, called [DiBendetto] and said, ‘Let’s have lunch,'” Faulkner said.
“We looked at each other’s balance sheet,” DiBendetto said. “We looked at our customer base, and we looked at our board of directors. I knew 50 percent of his board, and he knew probably all of my board.”
That began an arduous two-year process of bringing the two former rivals together. The boards had to vote to accept the merger. The NCCU had to appease the National Credit Union Administration (NCUA), the federal oversight arm analogous with the FDIC, by mailing ballots to every member of the bank.
“Our interest in these matters is that the letter of the law is followed,” said John McKechnie, director of public and congressional affairs at the NCUA. “The concern is that the members have the proper information to conduct [an informed decision about the merger].”
Family Ties
On Nov. 20, the state’s Commissioner of Banks signed off on the merger, and now the two institutions must combine their two cultures into one institution.
“Can you mesh these two institutions socially?” said Stephen Coukos, a partner at Chu, Ring and Hazel, a Boston-based corporate and business law firm. “That is an enormous challenge in itself when you’re talking about two mutual banks. When you’re taking a mutual and a credit union merging, that takes that cultural challenge up a few notches.”
Coukos said other credit unions and banks have considered merging in the past, but hadn’t consummated the interest before now. With this roadmap in hand, however, more credit unions and mutual banks may consider mergers.
“All the reasons that would make sense to merge two smaller mutual banks come into play when you’re looking at a mutual bank and a credit union,” Coukos said. “Having seen one be done always opens people’s minds up a little more to the possibilities.”
DiBendetto said the two companies will have joint holiday parties: one with the combined board of directors and one with the combined staff.
