Executives at 2 Vermont credit unions respond to activists criticizing merger

Executives at two Vermont credit unions defended their planned merger against an activist effort to upend the deal, arguing that the combined institution will be stronger amid greater competition from large banks.

A month after Vermont State Employees CU and New England FCU announced their agreement to merge and operate under the New England FCU name, a group of former Vermont State Employees CU board members, including former CEO Steven Post and former board chairs M. Jerome Diamond and Kimberly Cheney, launched a web site with an open letter calling for new leadership at the institution, and for all Vermont State Employees CU members to vote against the merger.

"VSECU is perfectly capable of being present for at least another 75 years, and it should be," the letter states in reference to the credit union's 75th anniversary. "We believe independence is better than a merger — much better."

In an interview, Vermont State Employees CU's senior vice president of marketing and business development, Yvonne Garand, disputed that contention. Credit unions' status as preferred financial institutions has declined since 2017, while banks' status by the same measure has increased, she said, adding that the gap in preferred status between banks and credit unions is at its widest in over 20 years.

"I would debate that statement that VSECU can survive for another 75 years," Garand said. "In Vermont, we've never had the big box banks like Wells Fargo, Bank of America and Chase. They're starting to come into our state ... and are eroding the market share for VSECU and all credit unions, quite frankly."

Garand said she believes opposition to the merger stems from an emotional connection to the Vermont State Employees CU legacy, since the combined company will no longer bear the same name.

The activists' letter warned that the merger would cause Vermont State Employees CU's history, culture and presence to "evaporate into thin air." New England FCU President and CEO John Dwyer disputed that claim in an interview, describing the transaction as a partnership rather than a New England FCU takeover of Vermont State Employees CU.

The transaction is not set to close until late 2022 or early 2023, but Dwyer and Garand said they are confident that members will ultimately see the merger's benefits and vote in favor.

"We think our members actually have some very strong benefits that will come to them as part of this," Dwyer said. "This isn't about needing to merge, this is about a stronger organization and stronger value for our members as a joint organization."

Post, Cheney and Diamond declined to comment further until after Vermont State Employees CU's annual meeting, scheduled for March 30.