Utah's CUs Led Way To Federals
One of the biggest stories of 2003 was the rapid erosion of the Utah state credit union charter in the face of a banker-inspired tax initiative.
After threatening to exit the state system if lawmakers persisted in paring back the state credit union charter, which had once been one of the most attractive in the country, the state's biggest credit unions made good on their threat last year and fled to the tax-exempt safety of a federal charter.
The credit unions converting to federal charters, a total of eight in 2003 and 11 over the past two years, took with them millions of dollars of state sales tax and fee revenue for the Utah Department of Financial Institutions and the prestige of having the largest credit unions under the state umbrella. The moves also rendered a lesson to other states' contemplating a credit union tax.
The flight of the state's biggest credit unions smothered a legislative proposal to tax the largest state-chartered credit unions, even though lawmakers continue a two-year study of the tax proposal.
The credit unions converting to federal charter included Utah's six-largest state charters: America First CU, Ogden ($2.4 billion); Mountain America CU, Salt Lake City ($1.2 billion); University of Utah CU, Salt Lake City ($325 million); Deseret First CU, Salt Lake City ($275 million); Cyprus CU, Magna ($290 million); Goldenwest CU, Ogden ($260 million), as well as Jordan CU, Sandy ($145 million); and Eastern Utah Community, Price ($45 million).
Mostly because of the Utah fight, the number of credit unions converting from state charters to federal charters topped the numbers going the other way, 14-to-13, in 2003.
The biggest conversions from federal to state charter last year were:
* Verity FCU, Seattle ($250 million).
* SafeAmerica FCU, Pleasanton, Calif. ($230 million).
* Gulf Winds FCU, Pensacola, Fla. ($210 million).
Sterlent FCU, Pleasanton, Calif. ($115 million).