FCUs May Alter Par Value

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It is permissible for a federal credit unions to increase the par value of shares for new members provided it does not violate any state or federal anti-discrimination laws and that there's a rational basis for doing so, according to a new opinion letter from NCUA.

The opinion was in response to a request from Clinton, Md.-based U.S. Postal Service FCU, which wanted to maintain its $5 par value for existing members, but increase the par value of a share for new members. The credit union said it was seeking to raise its share-to-asset ratio to help absorb costs related to loan applications, while also generating higher dividends and lower loan rates.

In retaining the $5 par value for existing members, USPSFCU said it wanted to avoid any confusion or hardship for them if existing members should their balance fall below a new par value.

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