All redactions made pursuant to exemption (b)(6) of FOIA- personal privacy.
UNITED STATES OF AMERICA
BEFORE THE NATIONAL CREDIT UNION ADMINISTRATION
In the Matter of [redacted] (b)(6)
Docket No. BD-15-08
Decision and Order on Appeal
This matter comes before the National Credit Union Administration Board (Board) pursuant to 12 C.F.R. §745.202, as an administrative appeal of the determination by the Agent for the Liquidation Agent of N & W Poca Division Federal Credit Union denying [redacted]'s claim for dividends from July 1, 2008 through September 30, 2008.
N & W Poca Division Federal Credit Union, Bluefield, WV (Credit Union) was chartered in 1968 and served a variety of employee groups in the Bluefield, WV area. The NCUA Board placed the Credit Union into involuntary liquidation on October 3, 2008, due to insolvency and appointed itself as the Liquidation Agent. The NCUA determined that the Credit Union was insolvent as of September 25, 2008. The Agent for the Liquidation Agent (Liquidating Agent) made share payouts of the balances in share accounts directly to the shareholders, but did not pay unpasted dividends on the share balances for the period ended September 30, 2008. Because the Credit Union was insolvent prior to its liquidation, the Credit Union did not have sufficient earnings and therefore did not have authority to pay dividends for the period ended September 30, 2008. The Credit Union had paid dividends on share accounts for the period ended June 30, 2008.
[redacted] held two share certificate accounts (account #[redacted] and account #[redacted]) with the Credit Union. As noted, the Credit Union was liquidated on October 3, 2008. On the date of liquidation, the balance in account #[redacted] was $[redacted] and the balance in account #[redacted] was $[redacted], totaling $[redacted]. Following the liquidation, the Liquidating Agent paid [redacted] a total of $[redacted] on her share certificate accounts. The Liquidating Agent did not pay [redacted] dividends on [redacted] share certificate accounts for the quarter ended September 30, 2008. By letter dated October 30, 2008, [redacted] appealed the Liquidating Agent's determination to the NCUA Board. In [redacted] appeal letter, [redacted] requested dividends in the aggregate amount of $[redacted] on account #[redacted] and account #[redacted] for the quarter ended September 30, 2008.
Application of FCU Act and NCUA Regulations to Appeal
A federal credit union issues shares and share certificates, and pays dividends on those shares. Dividends are not the same as interest. Unlike interest, dividends may only be paid if the federal credit union has sufficient earnings. Section 117 of the Federal Credit Union Act, 12 U.S.C. §1763, states in part: "At such intervals as the board of directors may authorize, and after provision for required reserves, the board of directors may declare a dividend to be paid ... at different rates and maturity dates in the case of share certificates .. .. " The board of directors may not declare and pay dividends unless sufficient prior and/or current earnings are available at the end of the dividend period. 12 C.F.R. Part 707, Appendix C §707.2(i)2 and §707.4(b)(8)1.
The NCUA determined the Credit Union was insolvent as of September 25, 2008. This meant that the Credit Union did not have available earnings from which to pay dividends to any of its shareholders for the period ended September 30, 2008. Accordingly, no dividends could be paid. [redacted] is not entitled to dividends for the quarter ended September 30, 2008.
For the reasons set forth above, it is ORDERED as follows:
The Board upholds the Liquidating Agent's determination and denies [redacted]'s appeal.
The Board's decision constitutes a final agency determination. Pursuant to 12 C.F.R. §7 45.203(c), this final determination is reviewable in accordance with the provisions of Chapter 7, Title 5, United States Code, by the United States district court for the Federal judicial district where the Credit Union's principal place of business was located. Such action must be filed not later than 60 days after the date of this final determination.
So ORDERED this 28th day of April, 2009 by the National Credit Union Administration Board.
Mary F. Rupp
Secretary of the Board