CUs Designated as Public Depositories After Bill Signed by Florida Governor
Officials call this a “transformative step” enabling credit unions to conduct new business in the state.
On Thursday, Florida Gov. Ron DeSantis signed into law a piece of historic legislation that allows credit unions to be designated as public depositories, which will enable credit unions to do business with certain public entities – a space once reserved only for banks.
According to the Governor’s Office, House Bill 989 accomplishes the following:
- Increases protection for customers of financial institutions operating in Florida from unwarranted account cancellations and restrictions through a coordinated complaint and investigatory process within the Office of Financial Regulation.
- Removes Florida’s exclusive preference of holding public funds with banks, particularly with out-of-state big banks, by allowing community-based credit unions to hold public funds.
- Permits the CFO to have a dedicated consumer-liaison for assistance dealing with the Federal Internal Revenue Service.
Officials with the League of Southeastern Credit Unions (LSCU) praised the signing, calling it “a transformative step that opens up new avenues for credit unions.”
LSCU Senior Director of Governmental Affairs for Florida Christopher Hodge said, “Many credit unions across Florida actively collaborate with public entities through various events and financial literacy education. Now, this law empowers credit unions to accept deposits from some of the same public entities they already serve. It’s an exciting time for Florida credit unions, as it opens up new opportunities for membership growth and community engagement — a true embodiment of the ‘people helping people’ philosophy.”
According to LSCU, HB 989 will allow Florida credit unions to be designated as qualified public depositories with the following limitations:
- A total combined amount of not more than 7% of the total funds held in the state treasury.
- A total combined amount of not more than 7% of all public deposits of any state university or any state college.
- A credit union may not hold public deposits of more than 10% of its total institution’s assets.
President/CEO Larry Tobin of the Orlando, Fla.-based FAIRWINDS Credit Union ($4.7 billion in assets, 229,803 members) said the signing of HB 989 is a “significant win for credit unions in Florida on several fronts.”
Tobin said, “This expands the scope of potential deposit sources from certain public entities, including state universities. The potential increase of deposits not only strengthens our liquidity position, it also diversifies the funding base, enhancing overall financial stability.
“By being designated as a qualified public depositor, we can forge even stronger relationships with public entities, opening the doors to potential business opportunities and collaborations.”
Tobin continued, “For example, FAIRWINDS has been a longstanding partner with the University of Central Florida on several fronts. Now we have even more opportunity to be their trusted financial partner.
“This bill empowers credit unions in Florida to better serve our communities, strengthen our financial standing and contribute to the state’s economic growth.”
In attendance for Thursday’s bill signing were a number of credit union leaders from around the state, including University of South Florida Federal Credit Union’s president/CEO, and chair-elect for the LSCU Board of Directors, Richard Skaggs. He said, “Investing public funds into credit unions will keep a portion of Florida’s taxpayer dollars right here in the Sunshine State. Last year, my credit union invested $7 million back to the University of South Florida to help them with their strategic initiatives. This law will now allow the university to invest back in their credit union with a greater rate of return.”
When asked how this legislation might make a positive difference for credit unions across the country, Tobin said, “As more credit unions around the country are able to accept public deposits, this will only help the credit union industry as a whole continue to grow and strengthen.”
Credit unions will be able to begin the application process to become a qualified public depositor on July 1.