NCUA Earns Fat Dividend Check from Old Purchase

NEW ORLEANS - The U.S. Attorney's office reported that Liberty Bank and Trust Co. has agreed to pay NCUA $1 million to resolve a long dispute over dividends the bank agreed to pay when the credit union regulator sold it part of a failing credit union. Upon closing Corpus Christi FCU in 1992, NCUA entered into a purchase and assumption agreement in which the agency agreed to invest $2.3 million in Liberty Bank in exchange for 2.3 million shares of Class A Preferred Stock.

NCUA claimed that the bank neglected to pay it dividends between 1995 and 2004, as promised. NCUA also claimed that the P&A stock agreement gave it the opportunity to vote before the bank issued any more preferred shares that would have rights senior to NCUA's on liquidation and that the Bank issued more stock before allowing NCUA to exercise its voting rights.

The $1 million payment represents a compromise of the disputed claims.