Notice of Special Meeting of the Members on Proposal to Merge - PDF document

1 Notice of Special Meeting of the Members
Notice of Special Meeting of the Members on Proposal to Merge Post Office Credit Union , the Board of Directors of your credit union approved a proposition to merge Post Office Credit Union ( with Pentagon Federal Credit Union ( ). You are encouraged to attend a virtual special meeting of your credit union at https://www.pocu.com December 28, 2020 at 6:00 Purpose of the Meeting The meeting ha To consider and act upon a proposal to merge our credit union with PenFed, the continuing credit union. To approve the action of the Board of Directors of our credit union in authorizing the officers of the credit union, subject to member approval, to carry out the proposed merger. If this merger is approved, our credit union will transfer all its assets and liabilities to PenFed. As a member of our credit union, you will become a member of PenFed. On the effective date of the merge r, you will receive shares in the continuing credit union for the shares you own now in our credit union. Other Information Related to the Proposed Merger he participating credit unions and appraised each credit union’s share values. The appraisal of the share values appears on the attached individual and consolidated financial statements of th participating credit unions. directors credit have concluded the proposed merger desirable following reasons: In today’s regulatory compliance , and increasing cybercriminal threats, our Bo ard of Directors evaluated strategic possibilities to assure that you, our member, will continue to receive the full range of pro and services you deserve. To ensure continuity of operations while seeking to expand product offerings and improve servic options, including collaborating with like institutions to consolidate key support functions, maintaining the current course alone, or merging with a strong and proven performer. While there are some benefits with each option, only one meets the full range of our objectives: growth of membership, expansion of product offerings, infusion of investment in IT cyb

2 er security, improved training and enha
er security, improved training and enhanced community service. After considering alternatives, we determined that a merger with PenFed is in the best interest of our members. Net Worth The net worth of a merging credit union at the time of a merger transfers to the continuing credit POCU has a higher net worth ratio than PenFed Share Dividend POCU’s Board of Directors has determined to distribute a portion of POCU’s net worth to each eligible POCU member if the merger is approved and consummated. time capital distribution will paid dividend each POCU member if the merger is approved and consummated aggregate dividend all members amount to approximately $6 0,000. Eligible members are defined natural person members least one share regular share account as of August 1, 2020 and who continue member standing date capital distribution paid. A member is not in good standing and is ineligible to receive the bonus dividend rebate if they have caused the credit union a loss due to loan and/or share charge offs, have loans and/or any account that is 60 days or more past due. Merger Related ial Arrangements POCU s Board of Directors has also paid special attention to the protection of its highly valued employees. I am very happy to inform you that PenFed will retain all POCU staff and you will see all of the same faces when you visit our bran ch location after the merger. A major aspect of our decision to partner with PenFed pertains to their best class employee benefits. PenFed is a national destination employer that offers competitive benefits to all of its employees, including individual and family health, vision, and dental insurance, 401K matching, life insurance, education assistance and other typical benefits. POCU employees will be eligible to participate in these benefits in accordance with the terms and conditions of the benefit pla n documents. The amount of such benefits are incalculable at this time as they are dependent on the employees’ corresponding elections. ll employees of POCU are being offered a yea

3 r employment offer except for the CEO an
r employment offer except for the CEO and Vice President. Select employees will receive a retention bonus ( up and not to exceed $10,000 for any employee NCUA Regulations require merging credit unions to disclose certain increases in compensation that any of the merging credit union's officials have received or will receive in connection with the merger. In addition, PenFed will provide POCU’s CEO, Kevin , with a five (5) year employment offer and a $13,000 increase in annual salary from $112,000 to $125,000. Also, the Vice President, Tammie Stuntebeck, will receive a three (3) year employment offer and 00 increase in annual from he CEO, Kevin Yaeger , will be entitled to the following severance payment: If termination of employment by either party occurs within eighteen (18) months after the merger completion date, forty two (42) months of his then annual salary. Beginning with nineteenth 19th ) month of employment following the merger completion date and for each successive mon th, up to the sixtieth (60 th) month of employment, one (1) month of severance pay will be deducted from total ) month severance guarantee. Kevin Yaeger ’s proposed annual salary is $125,000; maximum payout if employment is terminated by either party immediately following the merger would be $437,500. he Vice President, Tammie Stuntebeck , will be entitled to the following severance payment: If termination of employment by either party occurs within twelve (12) months after the merger completion date, twenty four (24) months of her then annual salary. Beginning with the thirteenth (13th) month of employment following the me rger completion date and for each successive month, up to the thirty sixth (36th) month of employment, one (1) month of severance pay will be deducted from the total twenty four (24) month severance guarantee. Tammie Stuntebeck ’s proposed annual salary is $88,700; maximum payout if employment is terminated by either party immediately following the merger would be $177,400. The aforem

4 entioned severance packages may result i
entioned severance packages may result in a one time payment of $614,900. PenFed has agreed to donate $50,000 per year for five (5) years to support charitable organizations and community events recommended by POCU’s board of directors, who will be serving in an unpaid advisory capacity after the merger (the “Advisory Board”). The amount and designation of organizations to rec eive these donations will be approved by PenFed on a case case basis and will exclude any organizations where the Advisory Board or POCU employees have any fiduciary interests. Services and Member Benefits OP Financial Services Network The following table outlines any increases in service fees: Service FeesPenFedPOCUSavings Account Excessive Transactions (Regulation D)Overdraft Fee / Non-Sufficient FundsChecking Account Monthly Service Fee Copy of StatementMailed Consolidated Statement of AccountsDomestic Wire Transfer$20 Outgoing / $15 Incoming *Waived with daily balance of $500.00 or direct deposit amount of at least $500.00 per month to the account**Waived with average daily balance of $250 †This fee is waived if you: (1) receive your statements electronically; (2) have a PenFed checking account with a monthly direct deposit of at least $500; or (3) maintain a minimum daily balance of $500 or more in your PenFed checking account Your savings will continue to be federally insured by the National Credit Union Share Insurance Fund to th e maximum limit allowed by law. Because PenFed is a healthy, financially sound credit union, the PenFed Board of Directors believes the amount a member has on deposit at POCU before the merger will result in an equal amount on deposit at PenFed after the merger and that no adjustment in the accounts of any member will be required. PenFed intends to maintain the current POCU branch, located at: branches nationwide, no branches in the vicinity. PenFed’s main office is located at: 7940 Jones Branch Drive, McLean, VA 22102 Voting Information It is the recommendation of your Board that you vote “yes” to appro

5 ve the merger. Please be assured that
ve the merger. Please be assured that you are our valued member, and we have every confidence that you will be pleased by the level of commitment, service, and value that you will receive f rom PenFed. We believe that the proposed merger will provide our membership improved services, access to a more robust and competitive product offering, and an online and mobile banking experience POCU is currently able to offer you, our valued member. The merger must have the approval of a majority of members of the credit union who vote on the proposal. The Board of Directors encourages you to attend the meeting and vote on the proposed merger. Whether or not you expect to attend the me eting, we urge you to sign, date and promptly return the enclosed ballot to vote on the proposed merger. If you wish to submit comments about the merger to share with other members, you may submit them to the National Credit Union Administration (NCUA) at https://www.ncua.gov/services/Pages/resources expansion/comments proposed merger.aspx or National Credit Union Administration, 1775 Duke Street, Alexandri a, VA 22314 3428. The NCUA will post comments received from members on its website, along with the member's name, subject to the limitations and requirements of its regulations. The independent firm Ballot will serve as the Teller of Election will attest to the balloting process and results. Enclosed with this Notice of Special Meeting is a Ballot for Merger Proposal. If you cannot attend the virtual meeting, please complete the ballot and return it to the Teller of Election using enclosed self addressed and prepaid envelope provided no later than 5:00pm on December . To be counted, your ballot must reach us by the date and time announced for the meeting Or vote online at https://www.pocu.com d select the “Vote Now” Button. Directions for attending Virtual Special Meeting To attend the virtual Special Meeting, please visit https://www.pocu.com BY ORDER OF THE BOARD OF DIR ECTORS: James A. Wolff, II , Chairman, Board of Directors