Idahy State Charter Conversion
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State Charter Conversion Materials
MoneyLine Article
Introduction
Over the past few years, Idahy’s Board of Directors and management have discussed ways for Idahy to grow and offer an expanded array of products and services. One such strategy is to explore the possibilities of changing Idahy’s charter. The Board and management of Idahy have carefully evaluated all of the benefits, and any potential challenges, of a charter conversion. As a result of their efforts, the board and management of Idahy unanimously support converting to an Idaho State Charter. The primary reasons for recommending the conversion are to:
- Allow Idahy to offer membership to more consumers in our communities through an expanded field of membership
- Gain the ability to provide members an expanded array of products and services beyond what our current federal charter will allow
Simply put, the charter conversion will allow Idahy to help more people in more places with more products and services.
What new products or services will Idahy have available as a result of this conversion?
There are currently products and services offered by credit unions in other states that are not available to federally-chartered credit unions. As a state-chartered credit union, those products or services may be available to Idahy through a “parity” provision under Idaho Credit Union law. At this time, we have not identified any specific products or services that we anticipate making available to members; however, by converting to an Idaho State Charter, we will have the opportunity to offer products and services in the future that may not otherwise be available as a federally-chartered credit union.
What is the difference between an Idaho State Charter and a Federal Charter?
The United States credit union movement has the benefit of having a dual-chartering system in place. What this means is the credit unions throughout the United States have the option of being chartered under the state in which they are domiciled, or they can operate as a federally-chartered credit union. Idaho has 40 state-chartered credit unions (including the two largest Idaho credit unions) and 21 federally-chartered credit unions.
Idaho State-chartered credit unions are regulated by the Idaho Department of Finance (DOF) and are subject to complying with the “Idaho Credit Union Act” and financial operating laws. You can visit the Idaho DOF website for more information at:
http://finance.idaho.gov/CreditUnion/CreditUnions.aspx
Federally-chartered credit unions are subject to regulation by the National Credit Union Administration (NCUA) and operate under the “Federal Credit Union Act”. For more information about NCUA, please visit their website at:
http://ncua.gov/AboutNCUA/Index.htm
Will my money still be insured if Idahy converts to an Idaho Charter?
Members’ money will still be insured as it is today, by NCUA through the National Credit Union Share Insurance Fund (NCUSIF), even after becoming state chartered. State-chartered credit unions have the option to be privately insured or federally insured through NCUA. Idahy’s board intends to continue with the federal insurance.
Why is it necessary for Idahy to switch to a state charter?
The charter conversion will originate new populations of eligible members. We view the expansion of our field of membership as a crucial component of the growth strategy and continued success of Idahy. Although the federal-chartering system allows for the changes we feel are necessary, it would be at a considerable expense to the credit union, take an extended period of time to prepare such a submission, and there is no guarantee that our request would be approved.
Under the state-chartering system we can request an expanded field of membership that will accomplish the same results that we seek with a much smaller expense to the credit union and a shorter time frame of approval. In addition, as an Idaho State-chartered credit union, Idahy will be able to offer an expanded array of products and services to members that may not be available under the federal chartering system.
How will my Idahy accounts change?
Idahy accounts will not change as a result of conversion to a state charter. In fact, the only change members will see is that the “Federal” will no longer be part of Idahy’s official name.
Is this conversion in any way related to the current economic crisis?
Absolutely not. Idahy has been, and continues to be, prosperous and financially sound. In fact, Idahy’s regulators would not permit the charter conversion if the credit union had safety and soundness issues.
Many financial institutions are experiencing high losses due to mounting defaults on their subprime mortgage loans. Idahy does not offer subprime lending, due to the high risk associated with these types of loans. Because Idahy members entrust us with their money, we consistently use responsible and sound lending practices. This allows us to remain in a healthy financial position and provide competitive deposit and loan rates to our members.
How will Idahy be regulated?
Idahy is currently regulated by the National Credit Union Administration (NCUA). Under the state charter, Idahy will still be partially regulated by the NCUA because we will still provide NCUA share insurance. However, Idahy’s primary regulator will become The Credit Union Section of the Idaho Department of Finance.
The DOF Credit Union Section recently completed its Annual Performance Standards Evaluation as part of the National Association of State Credit Union Supervisors (NASCUS) Accreditation Program. The Credit Union Section has been nationally accredited since 1990. In addition, the department enjoys an excellent working relationship with other state credit union regulators and private insurers. The Department is an active participant in National Association of State Credit Union Supervisors (NASCUS), which actively coordinates with all state credit union regulatory agencies and the National Credit Union Administration (NCUA) on a variety of issues that affect the credit union industry.
The Department also has a good working relationship with NCUA, the federal agency that regulates federal credit unions and administers the National Credit Union Share Insurance Fund. Department personnel meet regularly with NCUA staff to discuss regulatory issues of mutual concern and coordinate corporate credit union examinations. |
