Texas credit union gets ready for $82 million asbestos settlement coming to members

CORPUS CHRISTI, Texas – Navy Army Federal Credit Union is bracing for the aftermath of a recently-settled lawsuit involving a local employer that will pay roughly $40 million, after taxes, to 3,000 of its members. How does a credit union prepare for such a windfall of cash flow? One plan is to give members the benefit of the doubt, said Wayne Vann, the credit union’s president, who is hoping that members will at the very least, pay off any outstanding debts they may have. “This may be a good opportunity to pay down that credit card debt,” Vann said. “But, of course, the money is theirs to do with want they want.” On the high side, the credit union is anticipating $40 million in payroll deposits that will flow mostly into savings accounts. To prepare, Vann has “ramped up the cash vaults,” for any large withdrawals, is planning to bring in 35 tellers and managers and depending on lobby and drive-through flow, may extend hours. An investment adviser will be on board for members wanting advice on savings options. Roughly 3,500 employees at Corpus Christi Army Depot, a military helicopter repair station, will receive their portion of an $82 million asbestos settlement from a lawsuit filed in 1997. The settlement stems from hazardous duty pay employees didn’t receive while they unknowingly worked with asbestos at the depot, which is owned by the Corpus Christi Naval Air Station. The amount is a reimbursement for the 8% salary increase the employees weren’t paid and not a settlement for any health damages, said Brian Bishop, an Austin-based attorney who represented the employees in the suit. At press time, current and retired employees and beneficiaries of deceased employees were scheduled to receive their payments on Nov. 29 and Dec. 13, respectively. Some individual employees may receive between $30,000 and $40,000 and those numbers have all but “ripped up (the credit union’s) ROA and capital numbers.” “We’ve already informed the regulator that our numbers will be skewed,” Vann said. “But financially, we’re stable enough that we won’t go below our Reg-Flex numbers because we’re running at 12% capital.” Navy Army FCU has 35,000 members and $201 million in assets. While the settlement is an “oddity” because the money will go directly into a credit union or bank account, a judge has ruled that employees have 10 days from the time they receive their settlement to pay Bishop 25% of their gross amount. The percentage stems from union leaders promising to pay Bishop a contingency fee equal to one-third of any settlement reached. A few depot employees, however, sued Bishop after the depot lawsuit was settled saying they weren’t required to pay him the fee. Bishop countersued and a judge ruled that he would be entitled to receive the 25% portion if he agreed to drop his lawsuit. Vann said the credit union is strong and healthy, will be able to handle the boon and is confident the settlement will be good for Corpus Christi’s economy. “We’re preparing like we did for Y2K but hopefully, it will be a moot point like it was then,” he added. – [email protected]