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PLANO, Texas – The 19,000 members of the $152 million Share Plus FCU will decide at a special meeting on July 23 whether or not they will remain a credit union or change their charter to that of a mutual bank, according to the disclosure notice the credit union sent to its members. Should Share Plus members agree and if Sunshine State, the other credit union in the charter change pipeline also becomes a bank, Share Plus will become the 22nd credit union in the country to have changed to a bank charter without having merged with a bank. Six other credit unions across the country have merged with mutual banks, but they are not generally counted in the same category of charter change. Sunshine State is scheduled to vote on June 30, 2004. NCUA told the credit union that it had no objections to its disclosure statements at the last possible moment, according to the credit union. “I believe the disclosures were approved by NCUA on April 23 and began to be mailed on Saturday April 24,” explained Barry Stevenson, marketing manager for the credit union. Since the notices were dated April 23, the agency clearance almost came too late. The clearance even seemed to catch some at NCUA by surprise. NCUA staff in Alexandria had not been aware the agency had cleared the notice until a reporter called to ask about it. Share Plus’ other charter change applications, one to the Office of the Thrift Supervision and one to the Federal Deposit Insurance Corporation, have already been approved, the credit union said, pending the results of its member vote. OTS confirmed that it has approved the application. The credit union has begun to get calls from members about the pending conversion and Stevenson reported that the calls had been overall very supportive. The minority of calls which had not been supportive, Stevenson explained, appeared to come from members who had not read the disclosure notice. “Someone called us and wanted to know if we were becoming a mutual fund,” he said. “They saw the word `mutual’ and jumped to that conclusion.” The disclosure statement did not reveal what the new bank might be called but suggested the tentative name would be “Share Plus Federal.” Share Plus will send notifications about the pending vote to its members two more times, once at 60 days and again at 30 days prior to the vote. It’s unclear whether the other notifications will include the full disclosure notice or if they will consist of a shorter notice and a ballot. In its disclosure, the credit union cited several reasons for seeking to make the charter change, among them having operations in several states and an inability to get a field of membership that would cover that large a geographic area. “The Credit Union has offices in four states where most of its occupational members and their families reside,” the credit union wrote. “The Credit Union is permitted to obtain a community charter to serve an entire community in only one state (with limited exceptions). If the Credit Union desired to obtain a community charter in Texas for example, it would not be able to expand in all of the other states where it now serves a limited occupational membership.” Share Plus serves primarily the employees and families of Frito-Lay, Inc., Yum! Brands, Inc. along with Pizza Hut, Inc, Long John Silvers, Inc. and the KFC Corporation and has branches in Kentucky, Florida and California in addition to Texas. Diane Liggett, a vice president with the credit union, explained that the credit union had looked at what it saw as an increasingly intolerable situation as a credit union. “This is really a strategic move for us,” she said. Share Plus didn’t plan on building new branches in all four states right away, but should that day comes the credit union wants to be ready, she explained. Liggett added that the credit union thought it unlikely that it would be able to get community fields of membership in all four states where it might want to build its business in the future. Both Stevenson and Liggett said that the credit union had no plans to issue stock in the three years covered by its business plan, whether directly or through a mutual holding company structure, and said that the credit union had been primarily looking to the future in the move. Coming relatively quickly after NCUA’s clearing of Sunshine State’s disclosure notice, it was evident that some of Share Plus’ reasons for making the charter change, particularly related to business challenges and auto loans, was word for word the same as Sunshine State’s. “As with many credit unions, the Credit Union’s ability to lend profitably in the automobile arena has been substantially eroded due to captive financing by dealers and manufacturers and the increasing use of lease financing,” the credit union wrote using the same language that Sunshine State had in its disclosures. Unlike Sunshine State, Share Plus’s auto loans seemed to support the suggestion that the credit union had been hurt by competition in the field, although the credit union’s loan program still looked pretty healthy when looked at as a whole. According to the NCUA data, Share Plus made 1,290 new car loans in 2001 but only 1002 in 2003. As a percentage, based on the credit union’s three-year new loan activity, 18% of credit union members likely have a new car loan from Share Plus in 2004. In terms of used car loans, the picture is somewhat better. According to NCUA records, Share Plus made 1,382 used car loans in 2001 and 1776 in 2003. All in all, based on those three years, 25% of the credit unions members have used car loans and more than 40% of members likely have either a new or used auto loan from Share Plus this year, and taken together the picture does not suggest an anemic auto lending program. Alan Theriault, CEO of CU Financial Services, the firm which helped produce both Sunshine State’s and Share Plus’ disclosure notices, denied that the firm has a template per se for the notices, but said that the notice authors were inclined to use language which had previously passed NCUA scrutiny. “The thing about these notices is that we recognize that NCUA has been partial to some language that has been used before,” Theriault said, and he pointed out that most credit union members were not going to read these notices as closely as an outsider might. “I bet no more than 20% of the members even read the disclosure notices at all,” he added. NCUA did not respond to questions by press time about the procedures it uses to evaluate and weigh the conversion disclosures or why credit unions in different parts of the country and serving different communities would have almost identical language in their disclosure notices. -

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