Execs Sound Off On Corporate Prepayment Plan
SAN ANTONIO-Credit Union Journal asked attendees at CUNA's America's Credit Union Conference, "What are your thoughts on NCUA's proposal to allow prepayment of corporate assessments."
Jerry Hernandez, president and CEO, Members Financial FCU, Midland, Texas
I am still studying the issue and thinking about it. The idea is a good one if it saves us money on what we owe. The return on regular investments is almost nothing right now, so if we put a deposit down at NCUA, so to speak, and it saves us money, that is a good thing. The benefit would be if down the road it wouldn't cost us as much.
I do know it would be more effective if all credit unions participate in the prepayment. It would make a bigger impact. We should all participate, because after all, we are stuck with it.
Wanda Roberts, manager/CEO, Tennessee River FCU, Counce, Tenn.
We are an $18-million credit union, so the corporate assessment has not hit us as hard as many other credit unions. We accrue each month so it doesn't hit us hard. The assessments have to be paid either way, so the prepayment option doesn't matter to me. Whatever we have to do, we just make arrangements to do it.
Kenny Harrington, president and CEO, MemberSource CU, Houston
If someone wants to do the prepayment, let them do it, but I won't be making that contribution. I think giving NCUA an interest-free loan is not good business. If it reduced our overall payment by paying in advance, that would be something to consider.
Fidel Gonzalez, president and CEO, First Imperial CU, El Centro, Calif.
I think it will work very well for some credit unions and their balance sheets, but we are still thinking about it at our credit union. Options are always good, and at least NCUA is trying. But at the end of the day, we all have to pay the assessments.
L. Wayne Mansur, president and CEO, Texoma Community CU, Wichita Falls, Texas
Having the prepayment option makes sense. There are credit unions that have excess cash and can afford to do it now. But there should be some sort of discount if they do that. That's business logic. NCUA can use those funds now and eliminate liabilities down the line, so there should be some benefit to credit unions that prepay.