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CEO 'Mystified' By NCUA Probe On Mergers

Editor's note: the following are excerpts from Vancouver, Wash.-based iQ CU CEO Roger Michaelis' comment letter to NCUA on the disclosure of merger-related compensation arrangements.

I continue to be mystified at NCUA's propensity to produce regulatory requests in areas of no importance to the ultimate goals of making credit unions successful. I view the regulatory landscape one in which it will be virtually impossible for small credit unions to survive...

The compensation flexibility is a tool to facilitate a merger. Once the existence and public knowledge of a proposed merger occurs, delays in the completion of the merger causes deterioration in membership and sometimes asset quality of the merging credit union. These compensation agreements can help prevent some of the deterioration and maintain a positive approach to the completion of the complexity of merging a credit union...

I see no value in disclosing an agreement to the membership to consider in their vote to merge. Compensation issues are part of a merger proposal delivered to the regulator and should be viewed on a reasonable basis. To present this as a part of a merger vote is to be more concerned about disclosure than board judgment.

I do not think we need to put our tools under greater scrutiny then they are. We are not companies that are traded on a public basis. We need to keep our unique nature. We have been able to "police" ourselves (i.e. Wings take-over). Take the high road and look for reasonable standard.

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