Comments Favor Home Base for CUs
Credit unions are speaking out against a rule proposed by the NCUA that would force credit unions out of homes and into commercial offices.
The home-based credit union rule was introduced at the agency's Dec. 12 board meeting. NCUA Chairman Debbie Matz and Board Member Rick Metsger voted in favor of the proposal while Board Member Michael Fryzel voted “no” for the first time in five years. The comment period lasted for 30 days but the date of the final vote has not been announced.
“I’m anticipating that it will be the first half of this year but I don't have an exact month,” Matz said at the February board meeting.
CU Times reviewed each comment letter posted on the NCUA's website as of March 4. The following eight credit unions were among the overwhelming majority opposing the proposal:
Will the NCUA set the thermostat?.
The $371.5 million Abilene Teachers Federal Credit Union in Abilene, Texas
“It seems rather odd that the NCUA knows what's better for small, home-based credit unions regarding their facilities than the actual credit union board of directors and its members. Will we soon see an ambient temperature rating that we are required to keep for NCUA examiners when they are onsite?” President/CEO James Boyd asked in a comment letter on the proposed rule.
“In effect, this rule will force some small home-based credit unions to no longer exist. Does that mean the NCUA will reduce its staff and budget? This type of decision is one that the board of directors and the membership make, not the NCUA,” Boyd added.
Rent would significantly increase operating expenses
The $4 million Aldersgate Federal Credit Union in Danville, Ill.
“I am respectfully requesting the NCUA withdraw its proposed rule, as the requirements would paralyze this credit union and effectively remove small home-based credit unions from the collective credit union map,” Manager Marilyn Sullins said in her comment letter.
“The rule, if passed, would significantly increase our operating expenses and consequently, negatively affect not only our 754 members but also the financial health of the credit union,” she added.
Editor's note: According to AFCU's Dec. 31 Call Report, the credit union paid $473 in office occupancy expense last year.
No examiner complaints yet
The $5 million B. I. Federal Credit Union in Pittsburgh
“One advantage we have as a home-based credit union is minimal expenses for fixed assets such as a building or lease expenses. Moving out of our current location into some type of retail or similar space will have a dramatic impact on our budget should this rule be finalized,” said the credit union's board of directors in a comment letter.
“During examination cycles we have always maintained a clean, safe and healthy working environment for our own staff and for visiting NCUA staff and have never received any complaints,” said the comment letter. “We have a dedicated phone and fax machine line, email address and website.”
Editor's note: According to BIFCU's Dec. 31 Call Report, the credit union paid $3,600 in office occupancy expense last year.
Neutral exam site wouldn't work
The $11 million Cal Poly Federal Credit Union in Pomona, Calif.
“I believe the members of the credit union should decide if they need and can afford an office. I do not believe NCUA should mandate it,” said CEO Barbara Bean.
“I work in a small credit union and trying to hold a meeting/exam outside of our office would not work. The amount of paperwork that is examined is huge. To put that all together and carry it back and forth to some alternative location on a daily basis during an exam would simply not work … we are talking three to four bankers boxes of files going back and forth on a daily basis,” Bean also said.
Loss of home-based credit unions would spur identity crisis
The $19 million Community Plus Federal Credit Union in Rantoul, Ill.
“The symbolism of the home-based credit union is very important to the identity of the credit union movement. What are the core differences between credit union and banks? Credit unions are controlled by volunteer members. Their mission is to serve the financial needs of their members, not make a profit for stockholders,” President/Manager Michael Daugherty said in his comment letter.
“Nowhere is this more apparent than in the home-based credit union. It is true that the home-based model no longer fits the needs of the vast majority of credit unions. Our world changes and credit unions have changed with it. Yet, a small number of home based credit unions cling to the original credit union model. We should cherish them and support them in whatever way we can. Instead, this proposed rule would effectively end them,” Daugherty added.
Assets safeguarded in home
The $341,887 Dallas IHC Federal Credit Union in Colleyville, Texas
“The expense to provide an office would certainly cause our expenses to rise so much that it would create a hardship for us,” said President/CEO Fable Griffin.
“We currently have our records in a fireproof safe with a backup there in the safe. All efforts are made currently to make the assets of the credit union safe. I do not support this proposal because it would so negatively affect the smaller credit unions,” Griffin also said in the letter.
Editor's note: According to DIHCFCU's Dec. 31, 2013 call report, the credit union did not pay any office occupancy expenses last year.
No pets on the premises
The $521,016 Our Family Social Credit Union in Omaha, Neb.
“Regarding the safety concerns of the examiners, we have never had any issues with our examinations. In 63 years, our (home-based credit union) has never had any pets on the premises,” wrote Larry Cain, correspondence secretary for the board of directors.
“Thus, we have never had any issues with violent pets or allergies related to pets. In 63 years, we have never had examiners climb up or down steps in our homes. The visits have always been conducted at the same dining room table we have our board of director meetings and supervisory audits,” he added.
Cain also said the NCUA's examiners have never communicated any concerns with the credit union's accommodations.
Editor's note: According to OFSCU's Dec. 31 Call Report, the credit union paid $9,300 in office occupancy expense last year.
What about disaster recovery sites?
The $2 million Queen of Peace Arlington Federal Credit Union in Arlington, Va.
“While the Queen of Peace Arlington FCU does not currently operate from a residential address, we do use a residential address as one short-term disaster recovery site,” said CEO Daniel Morrisey.
Morrisey said prohibiting the use of a residential address, even for a short period, would be costly for small credit unions. “In fact, a number of years ago, during a several-month period, this credit union was based in our home because of an issue of our use of the sponsor's location,” he wrote. “Once that issue was resolved, the credit union returned to the sponsor's property. During that period, had this rule been in effect, I seriously doubt that we would have been able to continue the operation of the credit union.”