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SALT LAKE CITY – No surprise, federal charter conversion proved to be topic No. 1 at the annual meeting of the Utah League of Credit Unions here. Even the state’s new first district GOP Congressman, Rob Porter, opened a featured luncheon address with, “welcome to the federal charter,” a remark which drew laughter from the audience at the Salt Lake Hilton. Though only a handful of the 87 state-chartered CUs have made their intentions publicly known – with at least one, Cyprus CU of Magna, already getting its NCUA charter last month – the talk among many delegates was how soon the crucial decisions would be made by CU boards. “We are planning to file our application on Monday,” said one southern Utah CEO who asked that his institution not be identified for fear of arousing banker opposition early in the application stage, but he suggested to a reporter, “talk to me in a couple of months.” Like other CEOs, the southern Utah executive lamented leaving the state system “since I don’t look forward to dealing with San Francisco,” an apparent reference to NCUA Regional offices in that city with jurisdiction over Utah. Of the three CUs impacted by the soon-to-be enacted Utah law, only the $1.1 billion Mountain America CU, Salt Lake City, has said it is filing a SEG-based application and hopes to win speedy approval from the regulator. The state’s largest, $2.4 billion America First CU, said a federal charter remains “an option” but that it was also looking at using a CUSO to organize an industrial loan company which under Utah law could offer business loans. Still another plan for America First CU is utilizing the CU’s Nevada branch as a vehicle to continue business loans for its Utah members, explained Rick Craig, president and CEO of America First. The Riverdale CU has been operating a Nevada branch since 2001 following its takeover of a troubled $50 million CU located in the community located on the Utah-Nevada border. Regarding industrial loan firms, Darryle Rude, supervisor in the Utah Department of Financial Institutions, described the entities as federally insured “non-bank banks” which have served for years as underwriters of consumer and commercial loans with 24 currently operating in the state. The loan firms and their expansion in Utah and other states have long received wide media coverage, he said, with their primary application in Utah for credit card issuance by some of the biggest names in the business including American Express, Merrill Lynch and Advanta. Industrial loan firms also operate in California, Colorado and Nevada, he noted. Echoing the views of many Utah CEOs here for the yearly meeting, America First’s Craig said the “hostile” Utah legislative environment with bankers in control made it imperative for CUs to take action if they expect to grow. “Bankers wanted the house and we gave up the kitchen,” is how Craig described what occurred when the tax portion of the bill was stripped but business lending was barred. Scott Earl, the League’s president and CEO, told the gathering that it was particularly disconcerting to hear legislators state that while they supported the CU view against taxation, “we had to give the bankers something.” Regarding federal conversions, one well-attended session of the three-day Utah conference featured a how-to seminar led by former NCUA Regional Director Allen Carver, now an Atlanta in G.A. – consultant with his own firm. In the session, titled “Choosing the Charter Option That’s Right for Your Credit Unions,” the former NCUA regulator praised Utah CUs for “proving yourself” by challenging the banking lobby and thwarting that industry’s “divide and conquer” strategy. Carver acknowledged that the relentless banking campaign “in which the banking arguments have become personalized” often made it disheartening for CUs “to hear so much misinformation spread about credit unions.” Banks worked hard, he said, at “wearing you down.” While the Utah fight has captured national headlines, Carver said he has cautioned CUs in other states “not to look for trouble” with the banking lobby and that the state-by-state tax battles may not be as pervasive as they appear. He said he has advised a number of CUs including one prospective client in a Midwest state-which he declined to identify-it is needless to worry or, indeed, pursue a charter switch since banks have not pressed their case there. Providing a do’s and don’ts list on charter changes, Carver cautioned Utah CU executives against “burning bridges” with either the state or federal agency once a switch is made since a CU may decide to return to its former agency based on new market conditions. He noted NCUA’s expected FOM changes coming March 27 and he also urged CUs seeking a federal or community charter to make sure their financial house is in order. Carver said examiners would be looking at such areas as capital ratios, return on assets, camel codes as well as deficiencies in recent audits. Carver also warned against discussing charter applications in the media or “speculating” about them with cohorts for fear of getting the word out too early and “stirring up ill will.” “Cool the rhetoric,” urged Carver who is head of Allen Carver & Associates of Alpharetta, Ga. and formerly headed up NCUA’s task force on FOM and charter conversions. The luncheon speaker and new state House representative, Rob Bishop, in his remarks thanked the League for its support in his successful race in November to beat Kevin Garn, a Layton banker and a cousin of former U.S. Sen. Jake Garn, chairman of the Senate Banking Committee. Bishop, a Brigham City high school teacher and former Utah House Speaker, recalled the difficult struggle CUs faced this year, but he stressed “you have every right to grow,” a fact denied by the banking industry. He also pledged “to be working with you for a long time in the future.” [email protected]

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