Kerry Says He Favors CU Tax Exemption
WASHINGTON-Democratic presidential candidate Sen. John Kerry (D-MA) has sent a letter to CUNA supporting the CU tax exemption.
"Credit unions' focus on member service means that your organization is constantly evolving to expand and enhance products and services for your members," Kerry said in the letter. "While you continue to support this important work, I want you to know that I will continue to support America's credit unions and oppose any efforts to change the existing tax-exempt status of credit unions."
After receiving the letter CUNA President Dan Mica said, "With Treasury Secretary Snow's recent reaffirmation of the Bush Administration's position, we now have both major party presidential candidates firmly in favor of the tax-exempt status of credit unions."
Two More Ex-CUs Go Public, Execs Cash In
WALL STREET-Two more former credit unions made their debut on the stock market last week to successful reviews by investors.
Shares in Citizens Community Federal Savings Bank, formerly Citizens Community FCU, and Kaiser Federal Bank, once known as Kaiser Permanente FCU, rose between 24% and 35% on their initial day of trading, earning insiders and other investors hefty first-day profits.
Covina, Calif.-based Kaiser Federal said speculators poured millions of dollars in new deposits into the former credit union in the months leading up to the initial public offering in order to get them in on the ground floor of the offering. The bank's deposits more than doubled from June 30 2003 to $785 million at year-end, when depositors were cut off from the $10 a share initial price.
The vast majority of the new deposits, $317 million worth, was out of state "hot money," the ex-credit union reported.
Those investors were not disappointed, as shares in the CU convert immediately shot up 40% in their first day of trading, March 31, before closing at $13.60, a 36% premium on the day. The offering raised more than $55 million for the bank, while the first day run-up earned investors a quick $22 million in profits, including nearly $1 million for 10 insiders.
The biggest winners at Kaiser were CEO Kay Hoveland, who bought the maximum allowable 30,000 shares, netting her $108,000 in IPO profits. Four directors and two other top execs also subscribed to the maximum 30,000 allotment. In all, the four top managers and six non-management directors earned $918,000 of profits on their 265,000 shares in last week's IPO. The ex-CU has also set aside another 255,000 shares, worth $3.5 million, as free stock grants to be awarded to the same individuals over the next five years.
Kaiser's IPO followed by one day an initial offering at Citizens Community. Shares in Citizens Community opened on the Nasdaq Small Cap Bulletin Board at $10 each on march 30, and rose 35%, before closing the day at $12.37. Top execs and directors of the Eau Claire, Wis. bank, which converted from a credit union in December of 2001, earned a quick $285,000 in profits on the 120,000 shares they bought during the internal offering to depositors during the preceding 30 days. That includes CEO James Cooley, who earned $47,400 on his 20,000 shares, and board chairman Richard McHugh and director David Westrate, both of whom made $59,250 on their 25,000 shares. All three were involved in converting the credit union to a mutual savings bank two years ago.
One Wall Street analyst who follows thrift stocks said the first-day run-up in the newly public thrift was limited because of the restricted float, just one-million shares, by the fact the bank was only selling a minority stake to the public, and because the stock trades on the Nasdaq bulletin board.
Insiders and other shareholders will get another chance to add to their stock profits when the credit union decides to sell a majority stake and lists on the Nasdaq down the road.