Corporates Take Wait and See Approach to Proposed Regs
Larry Eisenhauer, president/CEO of the $340 million Kansas Corporate CU, said his members want the corporate to "remain a separate entity."However, the CEO said he and his board won't make any final decisions about KCCU's future until they see the legacy assets plan, final corporate regulations and know which products and services they will continue to receive from U.S. Central.
"The regulations as proposed would make it difficult for any entity to generate the earnings necessary to meet new capital goals," he said. "We're taking a wait-and-see position."
However, he said KCCU could meet proposed capital requirements without asking 80% of members to contribute new money. His members would be less likely to capitalize a newly formed institution than they would Kansas Corp, he added.
Jeff Merry, chief financial officer of the $1.34 billion Volunteer Corporate CU, said his corporate could meet proposed capital requirements as written with just a few adjustments to its business model.
However, he said consistent objections in comment letters clearly show which proposed corporate regulations need adjusting. VolCorp is "cautiously optimistic" the NCUA will ease some restrictions that corporates argue limit earnings but not risk.
"NCUA appears to be listening to industry feedback," he said. "It's not just a formality, they appear to be sincerely taking the feedback they receive and applying to the proposed rule to make it better."