RUTLAND, Vt. — Credit Union of Vermont scored a victory last week when NCUA ruled that Tricorp FCU was wrong to pay lower dividend rates on member capital accounts that gave their three-year notices that they intend to withdraw their funds.
As CU Journal previously reported (
"The practice of paying lower dividends on MCA on notice may be supportable due to the additional cost to a corporate credit union to maintain required regulatory capital levels," Hunt wrote. "However... if an MCA account on notice is to be paid a lower dividend than other MCAs, that term or condition must be disclosure in the initial disclosure statement and annually thereafter." Hunt also nodded to the report, previously confirmed by Tricorp VP Fred Johnson, that other corporates were following the same practice. In the letter, he told Fogg that his office plans on informing all corporates of the decision. "I have huge respect for the staff of Tricorp FCU; we've always been very pleased and proud to be associated with them. However we feel that NCUA has issued a fair decision in this case that a CU should not be unnecessarily penalized solely for exercising its right to give notice on its accounts," Fogg said. "We're hopeful that the corporate system can rebound and can continue to serve natural person credit unions, but we have a fiduciary responsibility to safeguard our assets and those of our members." CU of Vermont has asked Tricorp to retroactively apply its previous dividend rate.
