Important Member Information on Proposed State Charter Conversion

It's not change…it's an evolution of who we are and what you, as members, want us to be for you, your kids and your grandkids. As part of our growth, sparked by your advocacy and loyalty to this organization, we continue to evaluate who we are and what it takes to feed our growth and profitability to bring you the products and services you desire. One such shift, taking place right now, is our request for a change from a Federal to State chartered credit union.

Catholic Federal Credit Union has a rich history, since 1956, of positively impacting the lives of generations of families. The Board of Directors and management team believe converting to a state charter is the best option to continue providing member-owners with unsurpassed service from a strong, stable and viable credit union for years to come. The decision to pursue a change in the charter was made after careful consideration and consultations with industry experts. A state charter conversion will ensure that we are here to stay for the next 60+ years and for future generations by providing the credit union the opportunity to continue to serve our current field of membership and to serve additional geographic areas in Michigan.

A state charter conversion notice and ballot will be mailed to all eligible members prior to a special member's meeting where members can vote from 3pm – 6pm on Thursday, February 28, 2019 at Horizons Conference Center, 6200 State St., Saginaw, Michigan. A majority of the votes cast by the members is required to approve the conversion. Members can also vote via mail by returning the ballot in a postage paid envelope to the CPA firm Andrews Hooper Pavlik PLC. Any ballots received after 6:00pm on February 28, 2019 will not be counted.

We're excited about the path ahead for our members and the communities we serve. We appreciate your support. If you have any questions about the charter vote, please see the additional information on the following pages or contact the credit union at (800) 798-2328.

Important Note: All Catholic Federal Credit Union deposit accounts will continue to be federally insured by our current federal government agency, the National Credit Union Administration's Share Insurance Fund.

Will a state charter conversion impact my account?
This will be a seamless transition to our members.

  • Account numbers and passwords will not change.
  • Our existing branches, including our Contact Center, will remain intact and business hours will remain the same. It will be business as usual for members.
  • There will be no new or modified fees associated with the charter change.
  • Mobile and Online Banking access will not change.
  • The accessibility of loan and deposit products will not change.

What are the advantages of converting to a Michigan state-chartered credit union?
The proposed conversion would result in the following advantages in service and benefits to the members of the credit union:

  • The most significant and tangible benefit of the state charter is the ability to expand the credit union’s field of membership, which is not permissible under current NCUA policies for federally insured credit unions.
    • On January 3, 2018 we were granted a community charter from the NCUA. This gave us the ability to serve anyone that lives, works, worships, or attends school within the 19-county area defined as a rural district by the NCUA’s field of membership rules. The benefits of this were immediate and obvious to the credit union leadership and staff. This was short lived. We were contacted by the NCUA on March 30, 2018. As a result of a split-decision U.S. District Court case NCUA had battled with the American Bankers Association, the NCUA rescinded our newly issued community charter and reverted us back to the associational based field of membership as previously issued in November of 2015, which limits the credit union’s membership growth.
       
  • Positioning Catholic Federal for future growth so that the credit union can continue to provide the full range of products and services members want, and have come to expect, from their credit union.
  • Careful and measured growth from this conversion will enhance our ability to keep our dividend and loan rates competitive in the marketplace and allow continued investment in new products and services, including enhanced electronic services.
  • With this diversified and expanded field of membership, the credit union intends to be able to better serve its members by maintaining both profitable growth and financial safety and soundness for the long term in a larger geographic area.

Why does any credit union have to expand its field of membership?
Growth is essential for the long-term viability of the credit union. Simply stated, credit unions need to have the ability to grow larger in order to ensure continued success for future generations. This growth also affords the credit union the opportunity to expand its service offerings, improve its pricing and extend lower cost financial services to more members from all walks of life and in a wider community.

Will the credit union’s name and identity change?
Yes. The word “Federal” will be removed from the name. In addition to this shift, we are evaluating and researching the exclusivity challenges in our current name and brand, one that has served us well for the last 60+ years, since our inception, originally chartered to service parishioners of St. Mary's Cathedral Federal Credit Union in Saginaw. As with the successful evolution of any organization, ours is predicted on potential members believing they can join and enjoy all the benefits of credit union membership as many of you and your family members have done for decades.

Is Catholic Federal financially sound?
Most definitely. Catholic Federal is very sound financially. We have more than $340 million in assets with more than 11% net worth.

What is the difference between a state and a federal charter?
A federal charter means the credit union is regulated by the National Credit Union Administration (NCUA), located in Alexandria, VA. A state charter means the credit union is regulated by the Michigan Department of Financial Services, located in Lansing, MI; which regulates state-chartered credit unions and other financial institutions for compliance with the laws and regulations of the State of Michigan, as well as appropriate rules and regulations of federal agencies.

Why is a state charter better for our credit union than a federal charter?
After much research, it was determined by Catholic Federal’s management team and Board of Directors that the credit union’s goal of future expansion would be much more difficult – if not impossible – to achieve under a federal charter. A change to a state charter will allow us to maintain profitable growth and ensure long-term financial stability for our members. This change will provide the flexibility for us to serve more members by adding additional geographic territory to the field of membership.

Does the Board of Directors have to approve the charter change?
Yes. Catholic Federal Credit Union’s Board of Directors unanimously approved the charter change proposal.

Do members have to approve the charter change?
Yes. A majority of the votes cast by the members is required to approve the conversion. A notice and a ballot will be sent to all eligible members prior to our special members’ meeting. Members can vote via mail by returning the ballot in a postage paid envelope or by voting in person at the special member meeting on Thursday, February 28, 2019.

What are the financial impacts of the charter change?
Management is confident that the income and growth opportunities associated with this proposed change outweigh any additional costs.

When will the conversion take place?
The conversion will be effective May 1, 2019 if approved.

Will there be any changes to the Board of Directors or management team?
No. The Catholic Federal Credit Union Board of Directors and management team will continue to fill their respective duties in serving members.

Will there be any changes to my accounts, or to the services I use?
This will be a seamless transition to our members.

  • Account numbers and passwords will not change.
  • Our existing branches, including our Contact Center, will remain intact and business hours will remain the same. It will be business as usual for members.
  • There will be not be any new or modified fees associated with the charter change.
  • Mobile and Online Banking access will not change.
  • The accessibility of loan and deposit products will not change.

Is there a change to the minimum account balance?
No. The minimum amount required to be a credit union member, will remain $5.

Will new debit and credit cards be issued with the new credit union name? What about checks?
We will not do a mass reissue with new cards at this time. All existing cards will continue working as normal with the charter conversion until expiration or reissuance. Members will also continue to use their existing Catholic Federal checks until they need a reorder.

Will there be any change in rates or fees?
Deposit and loan rates and the current fee structure will not be impacted by the charter change.

What about member service and the credit union team?
Catholic Federal will continue to offer the same great products and services from the same branch locations and through our Contact Center with the same great teams. All branch locations will remain open.

Will my credit union accounts still be federally insured?
Yes. All credit union deposit accounts will continue to be federally insured by our current federal government agency, the National Credit Union Administration’s Share Insurance Fund.

Is this anything like a conversion to a bank, or will it lead to a buyout or merger?
No. The credit union is well-positioned and strong, with no intention to merge under another credit union or convert to a bank. Catholic Federal has always been and will continue to be a credit union and provide its members with all the advantages that being a credit union entail. The credit union remains committed to the cooperative principles upon which we were founded 60+ years ago.

Will my voting rights as a member change with the new charter?
No. Each member's voting rights will remain the same.

Under a state charter, can you still be a member if you move outside of the eligible service areas?
Yes, you can still be a member if you relocate outside of the credit union’s field of membership. Once a member, always a member.

What is my role?
You get to vote! We believe a YES vote will help secure the future of the credit union. However, as a member-owned financial cooperative, you as a member of Catholic Federal Credit Union get to make the final decision. Please read the letter and ballot carefully to understand the benefits of the state charter, then vote by returning the ballot in the postage-paid envelope to the CPA firm Andrews Hooper Pavlik PLC or attend the member meeting on February 28, 2019 at Horizons Conference Center. Any ballots received after 6:00pm on February 28, 2019 will not be counted. If you have any questions, contact the credit union at (800) 798-2328.

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