NCUA Approves Regional DividendRates

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ALEXANDRIA, Va. - (03/25/05) -- A federal credit union may choose topay different dividend rates on shares based on the location of abranch where the shares are maintained, according to NCUA. In a newlegal opinion issued to USA FCU, NCUA said Thursday that differentdividend rates are permissible as long as there is a rational basisfor the disparity. The San Diego-based credit union, which servesmembers of the military stationed in the U.S., Japan, Guam andKorea, said it would like to be allowed to pay varying dividendrates to members at different locations depending on the economicconditions and degree of competition in a particular location. "Webelieve," said NCUA, "an FCU's board of directors has theflexibility to pay varying dividend rates on shares based on thelocation where shares are maintained."

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