Community CU Q&A: What the CU is Telling Members

Credit Union Times Correspondent Jana Fowler is a member of Community Credit Union. After receiving charter disclosures in the mail, she called the hotline listed for members with questions. The call was answered first ring by an individual who identified herself as Sherri. Fowler found her very friendly and seemed genuinely concerned that questions were answered to the member’s satisfaction; in fact, she spent 20 minutes on the phone. When she couldn’t answer questions, she offered to have the CEO Gary Base call back with additional information. Here are answers to some of the questions posed: CU Times: In your “Costs of Conversion,” you list $150,000 for Membership awareness. What does that campaign include? CCU: The disclosures you’re reading, printing, mailing.. Three separate mail-outs are required by law. I think we mailed 186,000. CU Times: But printing and postage have their own separate categories. Would this cover artwork and production of materials? CCU: Yes, everything goes in it. CU Times: It says staff time is $0. How can that be? How are you involved and not paid anything? CCU: (Stumped). Hold on, I want to clarify on that. (After checking with another person) We put $0 in there because the current staff did all that. We paid no overtime, we didn’t hire any new people for the position, the people that were already on board did all the work. We incurred no extra charges. CU Times: They did it as part of their salaried position, correct? CCU: Yes. CU Times: Like marketing? CCU: Yes. CU Times: According to the disclosures, the credit union has been restricting its growth in branches, products and services because of the 7% net worth ratio requirement. That surprised me, because the credit union seems to be pretty proactive in opening new branches and adding new products and services, so what does that statement mean? What specifically has the CU not been able to do under these requirements? CCU: It’s a matter of growth. We have those caps, and we operate as a non-profit, so we cannot grow capital. We are bound by the 7% cap. CU Times: But how has that prevented opening branches? CCU: It’s really a matter of using your funds and capping out in all these areas. It takes about $1 million to open up a standalone branch. Really, I don’t know the answer to that. I can have our president call you back on that one. CU Times: I’m looking at the changes in voting rights section. “As a member of the CU, you have one vote regardless of your account balances. Each member of the mutual savings institution will have one vote for each $100 on deposit up to a maximum of 1,000 votes. We do not believe that this change will give any member, or group of members, substantially greater control than credit union members currently enjoy.” I can’t understand that. If I have a $5,700 balance I would have 57 votes, but if I have a $100 balance, I would have one vote. CCU: That would make the majority, according to how much you have on deposit. There’s only a certain amount of stocks that would be issued. In other words, someone couldn’t come in here and make a huge deposit and take over the vote. It will be limited to 49%. The majority of stock would be held by the bank, not investors. CU Times: Okay, but within the 51% majority, the people with the largest balances would control the voting in the credit union, right? CCU: I don’t feel comfortable explaining that one, I would like to have Gary call you back.