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Page 1: BRIDGEWATER CREDIT UNION BRIDGEWATER MASSACHUSETTS · 2018-01-26 · BRIDGEWATER CREDIT UNION BRIDGEWATER, MASSACHUSETTS INFORMATION STATEMENT. INTRODUCTION This Information Statement

BRIDGEWATER CREDIT UNION BRIDGEWATER, MASSACHUSETTS

INFORMATION STATEMENT

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INTRODUCTION

This Information Statement is being provided to you by the management of Bridgewater Credit Union (“BCU”) in connection with the special meeting of the members of BCU to be held on February 12, 2018 at 12:00 pm at its main office located at 75 Main Street, Bridgewater, Massachusetts (the “Special Meeting”). The Special Meeting will remain open for voting until 6:00 p.m., and members are encouraged to visit the main office during that time to receive information, ask management questions, and to vote on the proposal. The Special Meeting is being held to consider and vote to approve a proposal to merge BCU with and into Merrimack Valley Federal Credit Union (“MVFCU”) under the charter, by-laws and name of MVFCU (the “Merger”), with MVFCU being the continuing credit union after the Merger (the “Continuing Credit Union”). BCU and MVFCU have entered into an Agreement and Plan of Merger dated as of January 17, 2018 (the “Merger Agreement”), which requires, among other things, that the Merger be approved by the members of BCU in accordance with applicable law. This Information Statement provides information about the Merger and the Special Meeting.

The Directors and management of BCU have concluded that the Merger is in the best interests of BCU and its constituencies, including BCU’s members and the communities that BCU serves.

BCU and MVFCU operate in an extremely competitive market with many large banking institutions and credit unions. The Merger will allow BCU and MVFCU to combine and form a larger and more competitive credit union. The Merger will allow BCU and MVFCU to provide substantial benefits to members of the Continuing Credit Union, particularly current BCU members, and to the communities that the Continuing Credit Union will serve. The Merger will permit BCU and MVFCU to pool their financial resources, reduce costs, diversify risk, and better serve their communities by offering a broader array of products and services to members of the Continuing Credit Union with a more robust range of features and a greater level of member service through a more extensive network of offices.

BCU and MVFCU do not plan to close any branches or reduce any staff following the Merger. Members of both BCU and MVFCU will become members of the Continuing Credit Union under MVFCU’s charter following the Merger.

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DESCRIPTION OF THE MERGER

Bridgewater Credit Union

BCU is a Massachusetts-chartered credit union organized and existing under the laws of the Commonwealth of Massachusetts. BCU serves individuals within its field of membership, which is comprised of those persons living, working or having business within Barnstable, Bristol, Norfolk or Plymouth Counties, and persons employed by organizations within a fifty (50) mile radius of BCU’s offices for the purpose of payroll deduction. As of September 30,2017, BCU had approximately 31,301 members, total assets of approximately $359.5 million andwas considered “well-capitalized.” BCU’s deposits are insured by the National Credit UnionShare Insurance Fund (the “NCUSIF”) operated by the National Credit Union Administration(the “NCUA”) up to applicable limits, and deposits in excess of NCUSIF limits are insured bythe Massachusetts Credit Union Share Insurance Corporation (the “MSIC”). BCU offersbanking services through four offices, located in Bridgewater, Fairhaven, Plymouth and Quincyin Massachusetts.

Merrimack Valley Federal Credit Union

MVFCU is a federally-chartered credit union organized and existing under the Federal Credit Union Act. MVFCU serves individuals within its field of membership, which is generally comprised of those persons who work, worship, volunteer or attend school in the Merrimack Valley area,1 the families of MVFCU members, and those persons who work for one of certain eligible businesses or other legal entities in the area. As of September 30, 2017, MVFCU had approximately 47,883 members, total assets of $597.8 million and was considered “well-capitalized.” MVFCU’s deposits are insured by the NCUSIF operated by the NCUA up to applicable limits. MVFCU offers banking services through six offices, located in Lawrence, North Andover, Methuen and Haverhill in Massachusetts, and Plaistow and Seabrook in New Hampshire.

SUMMARY OF THE MERGER AGREEMENT

The Board of Directors of BCU and the Board of Directors of MVFCU have each adopted and approved the Merger Agreement under which BCU will merge with and into MVFCU under the charter, by-laws and name of MVFCU, with MVFCU being the Continuing Credit Union.

Conditions to Closing

Under the Merger Agreement, the closing of the Merger is subject to the satisfaction of several important closing conditions, none of which may be waived by either BCU or MVFCU:

1 The Merrimack Valley area consists of Andover, Amesbury, Boxford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, Methuen, Newbury, Newburyport, North Andover, Rowley, Salisbury, Tewksbury and West Newbury in Massachusetts, and Atkinson, Brentwood, Chester, Danville, Derry, East Kingston, Exeter, Fremont, Hampstead, Hampton, Hampton Falls, Kensington, Kingston, Londonderry, Newton, Plaistow, Salem, Sandown, Seabrook, South Hampton and Windham in New Hampshire.

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• The approval of the Merger by the members of BCU;

• The receipt of all applicable regulatory approvals, including the approvals of the

Massachusetts Commissioner of Banks, the NCUA and the MSIC; and

• The absence of any injunctions or other legal restraints preventing the closing of the Merger.

In addition, the closing of the Merger is also subject to the satisfaction of the following

additional closing conditions, each of which apply to both BCU and MVFCU unless waived by BCU against MVFCU or by MVFCU against BCU:

• The satisfactory completion of due diligence without the discovery of any fact or matter that would, materially and adversely affect the business, operations, financial condition, property or assets of the Continuing Credit Union;

• There shall have been no change in the business, assets, financial condition or

results of operations which has had, or is reasonably likely to have, a material adverse effect on either party;

• All of the representations and warranties of each party contained in the Merger

Agreement remain true and correct in all material respects at the time of the closing of the Merger;

• Both parties shall have complied with all agreements and performed all

obligations imposed on it by the Merger Agreement;

• Both parties shall have received all required consents from non-governmental third parties; and

• None of the regulatory approvals required to be received contains a burdensome

condition on the party.

Further, the closing of the Merger is also subject to the Boards of Directors of BCU and MVFCU taking all action required to effect the agreement between the parties as to the governance matters following the Merger, including the structure of the Board of Directors and management of the Continuing Credit Union following the Merger (see “Board of Directors After the Merger”). Termination; Effect of Termination

The Merger Agreement permits BCU and MVFCU to terminate the Merger Agreement at any time under the following circumstances:

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• By BCU or MVFCU, if the other party has breached the Merger Agreement (which breach shall not have been cured within 30 days of notice of breach), provided that the non-terminating party is not in material breach of the Merger Agreement;

• By MVFCU, if the members of BCU fail to approve the Merger Agreement; and

• By BCU or MVFCU, if the closing of the Merger shall not have occurred by October 31, 2018.

In the following circumstances involving a termination of the Merger Agreement, one

party may be required to pay a fee to the other:

• If the Merger does not occur due to a breach by the other party of its obligation not to merge or merge with, acquire or sell a significant portion of the assets of, or enter into or continue negotiations with, a third party during the period from the date of the Merger Agreement until the closing of the Merger or earlier termination, then the non-breaching party will receive a termination fee payment of $50,000.

Employee Matters

The Continuing Credit Union will retain all employees of BCU who accept employment with the Continuing Credit Union under the terms provided by MVFCU, and BCU employees who become employees of the Continuing Credit Union immediately following the Merger will receive an annual salary or wage and benefits from the Continuing Credit Union that is not less favorable than the annual salary or wage and benefits received from BCU immediately prior to the effective date of the Merger. There will not be any terminations of employees at either BCU or MVFCU upon the closing of the Merger, unless for cause.

Board of Directors after the Merger

The directors of the Continuing Credit Union immediately following the Merger will consist of the individuals who are currently directors of MVFCU and at least four (but no more than six) individuals who are currently directors of BCU. It is expected that the following individuals will initially serve as directors of the Continuing Credit Union immediately following the Merger:

Name Proposed Title

with Continuing Credit Union Current Board Membership

(BCU or MVFCU) Domenic P. Mazzocco Director, Board Chairman MVFCU

Alexander R. Oski Director, Board 1st Vice Chairman MVFCU

Michael M. Sayler Director, Board 2nd Vice Chairman MVFCU

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Name Proposed Title with Continuing Credit Union

Current Board Membership

(BCU or MVFCU) Maureen Ronayne Director, Board Secretary MVFCU

Augustine S. Longo Director, Board Treasurer MVFCU

John J. McSweeney Director, Board Assistant Treasurer MVFCU

Mukesh Dave Director MVFCU

Catherine M. DeBurro Director MVFCU

Ronald J. Guilmette Director MVFCU

Leon M. Pratt Director MVFCU

Juan Bonilla Director MVFCU

Raymond E. Arabasz Director BCU

David London Director BCU

Bernard J. Mulholland Director BCU

David K. Thomas Director BCU

Additionally, in the event that fewer than six current directors of BCU become members of the Board of Directors of the Continuing Credit Union on the effective date of the Merger, each remaining director of BCU will become an associate director of the Continuing Credit Union. The Merger Agreement provides that each such associate director will fill an open seat on the Board of Directors of the Continuing Credit Union when such a seat becomes available and that each associate director will attend and participate in meetings of the Board of Directors in accordance with MVFCU’s current policies and procedures governing associate directors. Associate Directors of the Surviving Institution, to become Directors of the Surviving Institution when an open seat on the Board of Directors of the Surviving Institution becomes available:

Name Current Affiliation

(BCU or MVFCU) Art O’Dea MVFCU Associate Director

Stephanie A. Sousa BCU Director

Mary K. Briand BCU Director

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Executive Officers

The following individuals will serve as the executive officers of the Continuing Credit Union immediately following the consummation of the Merger:

Name Proposed Title with Continuing Credit Union

Current Title (with BCU or MVFCU)

John J. Howard President and Chief Executive Officer

President and Chief Executive Officer, BCU

Donald J. Croteau Chief Financial Officer Vice President of Finance and Management Information Systems, MVFCU

Peter J. Matthews, Jr., the current President and Chief Executive Officer of MVFCU, will retire in connection with the closing of the Merger. Branch Offices The Continuing Credit Union will not close any BCU or MVFCU branches following the Merger. The Merger Agreement provides that the main office of MVFCU will become the main office of the Continuing Credit Union, and all offices of BCU and all other offices of MVFCU will become branch offices of the Continuing Credit Union following the Merger. The Merger Agreement also provides that the former offices of BCU will be operated under the trade name “Bridgewater Credit Union, a division of Merrimack Valley Federal Credit Union”, or a similar name, following the Merger. Regulatory Approvals Required

The Merger requires the approval of the Massachusetts Commissioner of Banks, the NCUA and the MSIC. Applications for the approval of the Merger are pending before the Massachusetts Commissioner of Banks, the NCUA and the MSIC. Expansion of Field of Membership of the Continuing Credit Union

Credit unions like BCU and MVFCU are membership organizations, and only a person who meets at least one of the criteria for membership under a credit union’s “field of membership” is eligible for membership in the credit union. MVFCU’s current field of membership includes those persons who work, worship, volunteer or attend school in the Merrimack Valley area,2 the families of MVFCU members, and those persons who work for one of certain eligible businesses or other legal entities in the area. BCU’s current field of membership includes those persons living, working or having business within Barnstable,

2 The Merrimack Valley area consists of Andover, Amesbury, Boxford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, Methuen, Newbury, Newburyport, North Andover, Rowley, Salisbury, Tewksbury and West Newbury in Massachusetts, and Atkinson, Brentwood, Chester, Danville, Derry, East Kingston, Exeter, Fremont, Hampstead, Hampton, Hampton Falls, Kensington, Kingston, Londonderry, Newton, Plaistow, Salem, Sandown, Seabrook, South Hampton and Windham in New Hampshire.

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Bristol, Norfolk or Plymouth Counties, and persons employed by organizations within a fifty (50) mile radius of BCU’s offices for purposes of payroll deduction. The Merger Agreement provides that MVFCU will amend its charter, simultaneously with and contingent upon the closing of the Merger, in order to expand the field of membership of MVFCU to include all those who are eligible for membership under BCU’s current field of membership, with the exception of those persons living, working or having business within Barnstable County. BCU has no office in Barnstable County, and MVFCU has no plans to open an office in Barnstable County. As of September 30, 2017, BCU had approximately 453 members who qualified for membership because they live, work or have a business within Barnstable County, each of whom will be eligible to continue to be members of the Continuing Credit Union as long as they are members of BCU at the time of the Merger.

EFFECT OF THE MERGER ON EXCESS DEPOSIT INSURANCE

BCU’s deposits are insured by the NCUSIF operated by the NCUA up to applicable

limits, and deposits in excess of NCUSIF limits are insured by the MSIC. Excess deposit insurance from the MSIC provides credit unions who are members of the MSIC with deposit insurance coverage for balances above the NCUSIF limits. Currently, the standard NCUSIF deposit insurance limit is $250,000 per share owner, per insured credit union, for each account ownership category. MVFCU’s deposits are insured by the NCUSIF operated by the NCUA up to applicable limits, but MVFCU is not a member of the MSIC. Therefore, MVFCU’s deposits in excess of NCUSIF limits are not insured. As result of the Merger, current BCU members would no longer have excess deposit insurance provided by the MSIC. Additionally, any person who is a member of both BCU and MVFCU at the time of the Merger will have his or her deposit balances at both credit unions combined for purposes of determining deposit insurance coverage in accordance with applicable law after the Merger. The Continuing Credit Union will notify all members that were actually members of both BCU and MVFCU at the time of the Merger of the effect of the Merger on their deposit insurance coverage.

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VOTES REQUIRED FOR APPROVAL

At the Special Meeting, each member of BCU will be entitled to cast one vote with respect to the Merger. Under BCU’s By-Laws, members may not vote by proxy. As a result, no votes by proxy will be permitted at the Special Meeting.

A quorum must be present at the Special Meeting in order for approval of the Merger and the amendment of the By-laws to be considered. Under BCU’s By-laws, a quorum consists of not less than 15 members.

At the Special Meeting, the members of BCU will be asked to vote on the approval of the Merger. By approving the Merger, the members would be approving the merger of BCU with and into MVFCU under the terms and conditions of the Merger Agreement.

The affirmative vote of a majority of those members of BCU present, qualified to vote

and voting is required to approve the Merger and the amendment of the By-laws.

To allow for the maximum participation by the members of BCU in the vote to approve the merger, the Special Meeting held on February 12, 2018 will begin at 12:00.p.m. and will remain open for voting until 6:00 p.m. During that time, members are encouraged to visit the main office of BCU to receive information, ask management questions, and to vote on the Merger. A copy of the Merger Agreement will be made available to any member upon request to BCU.

BCU’s Board of Directors knows of no other business to be transacted at the Special

Meeting. THE BOARD OF DIRECTORS AND MANAGEMENT URGE MEMBERS TO

ATTEND THE SPECIAL MEETING AND VOTE “FOR” APPROVAL OF THE MERGER.