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Share Par Value Increase

  • 1.  Share Par Value Increase

    Posted 9 days ago
    Hello,
    Has your credit union increased its share par value and if so how did you handle it? Did you grandfather existing members in or roll it out to the entire membership? Also do you include ALL deposit accounts in determining if the par value is met or just a regular share account?

    Thank you in advance,
    Emily Bopp
    SVP/CFO
    Century Federal Credit Union 

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  • 2.  RE: Share Par Value Increase

    Posted 7 days ago
    For a long time we were $25/primary share, but a year or two ago, we dropped it to $5.  And yes, that's one account, must have $5 in it...we don't include other deposit accounts in the $5 minimum.  We call it a primary share account, and are considering re-naming it to something like "membership account," etc.​

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    Joe Gallagher
    Director, Member Support
    Vermont FCU
    Burlington VT
    802.923.1147
    Manager/Loan ServicingManager/Loan ServicingManager/Loan ServicingManager/Loan Servicing
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  • 3.  RE: Share Par Value Increase

    Posted 7 days ago
    Emily,
    Not sure how much of a change you're considering, and it's been probably over 20 years ago that we upped par value from $5 to $25 but here are a few things I remember from back then.

    We permitted some length of time (1 year?) for members to bring up their balance (if needed) to the new par value/minimum balance. But I'd advise against grandfathering because that becomes a "lifetime" difference in accounts which will cause the CU headaches and likely errors or problems in handling member accounts. (For instance, the CU probably needs a different/second "Regular" share type to distinguish accounts subject to the new par value vs. the old value, which potentially interacts with minimums on dividend calculations, or with calculating funds available (such as for overdraft or other transfers).

    You'll want to consider when to change the minimum balance settings in your core DP to enforce the new minimum balance. My recall is that we gave members notification, allowed approximately 1 year for members to increase the minimum, and we made the DP change early in the process so that members who brought up their balance wouldn't/couldn't have the balance drawn back down below the minimum. I believe we made the changes effective immediately in our TISA's and other account disclosures. Oh, the other reason a CU needs to make the change in the core DP immediately is so "new" accounts have the new minimum/par value enforced. We only include the "Regular" share account in determining if the member has the par value on deposit. It may be possible to look across all deposit accounts for the member, but I suspect that would take significant custom programming (at least, for the 5 core systems I've dealt with) and vastly complicates enforcement and standard data processing. I also know there are some CUs which have structured a slightly different approach than adding balances across sub-accounts, by defining that some other type of account can serve as the membership par value share type. That probably introduces some complications as well, but it seems to me would be more "do-able" than adding balances across multiple share types.

    My 2¢,​

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    Paul Meissner CCUE, MBA
    SVP/Chief Financial Officer
    Credit Union of America
    Wichita KS
    316.265.3272
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