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Valor Credit Union Stops Accepting Add-On Deposits on Prime Rate Certificates
Valor Credit Union sent letters to members with Prime Rate Certificates informing them that they are no longer accepting add-on deposits into these certificates. This is a hurtful change in terms for members with Prime Rate Certificates. Valor Credit Union attempted a similar change in February when they announced a new 3% processing fee for additional deposits on CDs with terms over 60 months. However, after an uproar from members and this blog, Valor changed its mind and decided not to implement the CD fee. I’m surprised that Valor would try something like this again. I’ve emailed my Valor Credit Union contact requesting that they reconsider this change. Below is a copy of the letter that Valor Credit Union sent to members. It was dated 12/23/15. Readers reported receiving this letter on the 26th.
Dear Member:
Consistent with our reserved right to amend the terms of the Prime Rate Certificate product, we have elected to amend the product to the extent that, until further notice we will no longer accept add-on deposits into the Prime Rate Certificate.
Additionally, we are pleased to announce that until further notice we will waive all penalty fees if you wish to withdraw funds from your existing Prime Rate Certificate. If you wish to withdraw funds, please contact us at 1-844-VALORCU (825-6728) or visit your nearest branch location to speak with a Member Service Representative.
In deciding whether you may want to remove funds from your Prime Rate Certificate, please note that the amount of federal insurance provided by the NCUA for deposits in products offered by federal credit unions is $250,000. Amounts over that are not federally insured.
We appreciate your continued membership.
Regards,
The Team at Valor CU
When a CD (or a certificate as it’s typically called at credit unions) is issued, the customer and the institution agree to certain terms such as the interest rate, maturity and early withdrawal penalties. The general opinion from experts is that the terms of a CD should be maintained until the CD matures.
Valor Credit Union’s Prime Rate Certificate was unique in that it allowed additional deposits. Typically, CDs only allow one deposit when the CD is opened. The add-on deposit feature made the CD attractive and it helped to offset the CD’s downsides like a long 7-year term and a harsh early withdrawal penalty.
Valor Credit Union isn’t the only credit union that has tried to retroactively change the terms of its CDs. Fort Knox Federal Credit Union and CEFCU increased their early withdrawal penalties on existing CDs. Both of these credit unions claimed that their member agreements gave them the right to change the fee schedule at any time. This appears to be similar to the claim Valor is making. However, there is one important difference. Fort Knox FCU was given allowance for the change by the NCUA, but the NCUA did point out that a written change-in-terms notice must be sent at least 30 days before the effective date of the change. In this new Valor Credit Union case, there is no 30-day notice.
When I emailed my Valor Credit Union contact last February, he first explained why the decision was made to implement a fee to discourage add-on deposits:
It allows the Credit Union to control and manage the influx of cash. To date, the Credit Union has attracted over $53,000,000 into the product. Without a mechanism to control this, the Credit Union cannot manage its balance sheet properly.
Soon after that email, he sent a follow-up email announcing that they had changed their mind on the fee. I’m hoping that this will happen again. However, things appear to have become worse for the credit union since February. As DA member Lou described in the forum, Valor’s financial condition has deteriorated. If Valor fails and the NCUA arranges for another credit union to take over, the new credit union is free to lower rates on any of the existing CDs. Thus, it’s in the interest of members to keep Valor financially healthy. However, as DA member Pearlbrown said in the forum, "a financial institution must be prepared to stand by its decisions, just as we are. If terms of contracts can be changed unilaterally, then how can we conduct business with financial institutions or with each other in good faith?"
What they should have at least done is cap the allowable investment of any individual member to a preset amount over the term (say $100,000, - as NWFCU did with their recent add-on CD), - which would have mitigated the damage from such a prospective miscalculation.
What they're faced with now (or might have been had they not made the change they did) is that as "years to maturity" lessens and the 3% rate looks more predictably "above market" for the remaining term certificate holders will ramp up their additions and put Valor under even greater pressure.
As for suspending the EWP for those wanting to pull out, - well maybe if they offer a substantial BONUS for such action it's something I might consider, hehe.
They were closed for the day so emailed them the message. Hopefully they didnt decide to do the same thing as valor
Do I change my mind on the said CU? It is not even an issue. It was a business decision on their part after the replacement of their top management. I do not need to form an opinion on them.
I have many RCAs that earn higher than 3%, hope that they will last longer (not counting on it). Again, life is full of surprises. No need to dwell on it. Just move on.
Happy New Year! :)
Anonymous | May 30, 2014 | Comment #34Hope everything works well, but have you ever wondered why Toby would stretch out on this when they could get investors just as eager to go for a standard 7 year 3.04% cd without any obligations for the add on feature that would go south on them if interest rates go lower? Also, they pay more if the prime rate goes over 6.29% (However this is not likely to happen in the 7 year term) Something is not adding up on this so that is why I am a little hesitant to jump at it. What is in this deal for Toby? Is there small writing in the disclosure that maybe they can lower the minimum rate later? If what poster no. 9 says is true about the CFO, that would be even more reason to maybe stay away. Anyway, good luck and I hope it works out. It is NCUA insured, so no principal should be lost in the deal. As far as brokerage rate cd's, they come and go. Just investigate the most popular discount brokered CD's and you can get some rate information. There are several options from 7 to 10 years, but they come and go throughout the week. It is best to look at rates at the beginning of the week as this is generally when new issues are posted. Currently, the 10 year actually pays more but the less maturity ones are slightly under 3.04% that Toby pays on the prime certificate.
Anonymous | May 31, 2014 | Comment #65What possibly could be the real difference is if the following scenario happened:
Suppose you paid taxes on 4 years of unpaid earnings and thenToby goes under. NCUA pays your insured principal amount but not the unpaid accrued interest earned that you have paid 4 years of taxes on. I really do not know that this would be the case, but I would have to get some kind of written verification that I would not lose the 4 years of accrued interest that I already paid income taxes on.
could create the same effect with monthly withdrawals
Last time I had filed complaint. Looks like once again this is necessary. Anyone has link of the government agency that handled these complaints?
Don't put too much confidence into a CFPB complaint, and my prior complaints to NCUA went nowhere.
Valor is pretty clearly a rather messed up institution. To restore order, they need to go back to the old Tobyhanna name as soon as possible.
How would this benefit add-on Certificate holders financially?
Or is just "not letting Valor get away with it" sufficient reward to offset what would be the termination of a good deal (even allowing for the new restrictions)?
Making an example out of Valor is not a bad idea. If there are any other CUs out there thinking going AWOL on their agreements then this Court Martial will be enough of a deterrent.
Ken's source said this product took in 54M. If my calcs are right they'd owe a penalty of two years interest or 6% of 54M or about 3M. They move on as do we.
I can understand Pearlbrown's stance that they should be held to the original terms. This would be ideal but will it break the credit union? If it does and Valor is taken over our 3% rate is gone. I can see massive rollovers into Prime certificates in the next 6 years. If Valor is in trouble now how can they weather the storm for 6 more years?
Francis1
Francis1
So, paradoxically, a "victory" -- that is, forcing Valor to honor a deal they cannot honor -- could really be shooting ourselves in the foot.
BTW, how dare you use the words "Valor" and "honor" in the same sentence? :-)
Consider Valor's action as preventive to a dangerous overweighting that could well sink it.
Someone above mentioned 3%. Is that about right?
Can anyone answer this. Thanks
Was? Past tense? .... Looks like no interest in present/future?
An important aspect of this present situation is Valor's unwillingness to promise penalty-free withdrawals out into the future. Thus, should interest rates increase to the point where we can do much better than 3% elsewhere, they reserve the right to discontinue the penalty-free withdrawal currently being offered.
Also, given how they are doing business at this point, it appears most likely any rescission of that offer will come without any notice whatsoever to members.
Valor (so-called) Credit Union: epic fail.
Back when USCU (today merged with another CU, Self-Help) went through this, notice was offered to members before the hammer fell. That was fair. But that is not how Valor does things. They just detonate a nuclear explosion right in our faces . . . and expect us to remain smiling.
It may seem perfidious to some, but given Valor's reserved right to amend t
To fold with your head held high is a dubious strategy in any case.
I wonder if the line separating those who have a "**** the torpedoes" approach as opposed to those who are concerned with the viability of their certificates depends on how much money is invested in the certificates. I guess it would be pretty easy to ignore the consequences if you have little or no money already deposited in this credit union.
Anyway, based on my review of their financials, simply discontinuing the add-on feature will not resolve their problems. They must get control of their non-interest expenses or overhead. They have increased by a 1/3 for the first nine months of the year compared to a similar period the preceding year. This means they have to cut staff, maybe close one of their branches and eliminate other administrative expenses. They are running $2 million more in overhead than the prior year. There is no way they can stem the losses until they make these cuts. In fact, they will really need to focus on these efforts before taking the step of discontinuing the add-on deposits, which is actually having far less impact on their losses. A good way to assess the problem of their profligate spending is to compare the growth of their deposits to their overhead for the 12-month period ending Sept 30, 2015. While their deposits increased by a little more than 10%, their overhead grew by more than one third. This isn't sustainable.
I began doing business with the institution well over 3 years ago, and have had plenty of time to add to my accounts there from every maturing CD over that timeframe. The funds on deposit are significant.
However, unlike Lou, I am not advocating a position which will benefit me now in the short term (do whatever is needed so they remain viable and I'll continue to earn 3% on the money) because I choose to take a long-term view. If we don't take a stand now, we'll fight again - and probably worse - later. It may not be from this institution; perhaps from another one who sees an opportunity to take advantage of a precedent set by this credit union being allowed to waive consequences by successfully changing terms unilaterally at their convenience, but it will happen.
So, at least in my case, it is not as Lou rather scornfully suggests an issue of haves vs have nots (or have little or have not as much as others) that drives the "**** the torpedoes" approach, as he so pointedly refers to it. I am willing to take a stand against my own interests, and sacrifice something good in the short-term (3% through the term remaining on the funds on deposit) for the sake of a better future. It's a perspective that has always served me well, so I'll stick with it.
How is your Ebay business in Sugarland , TX doing?
We need a Return of the Jedi moment and defeat the dark side. These people are Indian Givers and they need to learn they are scum!!!!
Yes like those with Token amount of $$$
.
Submitted to NCUA:
-----------------
Complaint
-----------------
Valor CU (old name Tobyhanna CU) offered "Add-on" Prime Rate CD.
For opening this CD first I had to sign up the membership agreement, next was the account agreement, and next was the CD agreement.
According the very latest agreement, which superseded all others, the CD is supposed to accept additional deposits.
Valor CU has stopped accepting the deposits evenif the very latest contract that superseded the rest allow it. The credit union is claiming that they have a right to stop accepting deposits.
I do not believe the unilateral action by Valor Credit Union is lawful. Neither in the spirit nor in the words.
I will appreciate if NCUA will look into this urgently.
Thanks.
- <<my name >>
.
.
-----------------------------
Desired Resolution
-----------------------------
(1) Make the credit union start accepting additional deposits, and make the effective date of the deposit retroactive to the date when is stopped accepting
or
(2) Have the credit union give back all the assets (both principal and interest) in the CD and make them pay the additional full amount of the interest that I otherwise would have obtained, had I retained the the CD till maturity.
Valor has the legal right to amend the provisions of its agreements.
That right would be superseded only if they retract it subsequently.
Your "order of contracts" logic is simply wrong in suggesting that the CD agreement must repeat that previously established right to avoid its negation by omission in the specific terms of the CD. Now perhaps if there were some positive renunciation of the right to amend in the CD contract itself you might have an argument.
Your desired resolutions are no more than an empty fantasy lacking any rationale whatsoever.
Does anyone believe Valor has taken the action it has without legal counsel?
No ... don't believe that ... But is legal counsel's advise bulletproof? ... Can the NCUA find something that will make the legal counsel's advise fall by the wayside?
Let NCUA handle my complaint, let me reach their decision, let them inform me of the outcome ... Until then how about we wait?
Of the "desired resolution" ... well ... NCUA is asking me what's my desire and I am telling them what it is ..
... In short let the NCUA do what they are supposed to do ...
1.) Former CEO recently gets fired with NO explanation of why to the account holders.
2.) Valor is allowing any of their prime rate certificate holders to withdraw any amount of money they want without incurring an early withdrawal penalty.
3.) Valor recently sent out a letter that encourages account holders to make sure their account insurance is set up correctly.
Why, why and why? to me, It sure seems like they are wanting to get rid of their higher interest rate depositors in an effort to save the the credit union. I may be wrong, but maybe I'm not.
Any suggestions on where to go if Valor gets taken over? It seems Vanguard currently has a brokered cd [10 years] at nearly 3%. It's an option, albeit with a 10 year timetable.
1) He used to respond personally to members late at night. A few viewed this as being responsive, a few viewed this as an opportunity to get rid of "just another customer service rep" who was fetching CEO compensation.
2) Under his unwise management the CU offered the nonsensical "limitless" add-on certificate. Under his unwise management the CU implemented the fees for processing the additional deposits, and under his management in a few days the CU rescinded the fess. Three-strikes-and-he-was-out.
Personally I like guess #2.
However, I do agree wholeheartedly with your mention of need to be absolutely certain one is within NCUA insurance guidelines before considering any such course of action. Within those guidelines, though, this is a way to maximize returns with zero risk.
Things aren't working out, - it happens. But no one wants to face the consequences implied in what they originally agreed to, mild as they honestly are.
It's buyer beware. Be careful who you give your money to.
Fortunately, NCUA has your back and you won't lose your original investment.
Does anyone believe Valor planned on this course right from the beginning?
Honorable way would be to fire the management and/or fold operation with head held high.
Board of Directors Nominations
The Valor Credit Union Board of Directors has two Directors with expiring 2-year terms and two Directors with expiring 3-year terms in 2016:
- Andrew Nat (2-year term)
- Tony Parise (2-year term)
- Kara Badyrka (3-year term)
- Tom Casale (3-year term)
An election to fill these open seats will be held in March 2016 and winners will be announced at the 2016 Annual Meeting which will be held: Tuesday, April 26, 2016Scranton Branch
315 Franklin Avenue
Scranton, PA. Nominations for candidates to be placed on the ballot will be accepted by the Nominating Committee from December 1 – 31, 2015. After that time, only nomination by petition will be accepted until January 31, 2016. Qualifications for nomination include:
- Must be a member in good standing (not causing a loss to the Credit Union or abuse of Credit Union services)
- Must be 18 years of age or older
- Must be willing to attend training as necessary and required by the position
- Must be able to be bonded through the credit union insurance carrier
- Must be able to attend monthly board meetings
- Must be active on committees for which he/she volunteers
Interested members, including incumbents should promptly complete a Self-Nomination form, which can be found on this page or in any of our branches, and return to the Nominating committee no later than December 31, 2015. The nominating committee will determine a candidate’s suitability for nomination by reviewing the information submitted on the candidate’s Self-Nomination Form, account history, and possibly by interviewing the candidate. Nominees will be advised in writing whether the Committee will place his/her name before the membership for election.your voting rights.
.Valor gets off the hook for its high rate.
.Depositors could possibly get a similar rate and term with a better institution.
.Some CU could get a huge infusion of cash for being the host bank [assuming they wanted it!]
Just a thought. We used to do this 'group buy' concept to get off road parts for our Jeeps and significantly better deals than available any where else. All we had to do is deal with the company directly and place a large pre-paid order. This way, there was no risk to the company and they received a fairly large order. In return we got a special price. Everybody won. It was a good concept. Maybe it could somehow be applied to the current Valor situation.
Maybe somebody could broker a deal with Penfed or similar?
What are you driving these days now that your Mercedes had to go back to the credit union you led into this mess?
By the way buddy, when you talk about tweakings between parties to contracts and agreements presumably both parties to the agreement are involved in the negotiation and smart business people negotiate penalties which kick in if some part of the contract is broken. You know, kinda like EWPs - not like "we're going to do this and you're just going to have to take it".
And if you think the DA clan in insular, then why are you wasting your time here?
this is what i received
____________________________________________________________________________
Valor Credit Union Administrative Offices
315 Franklin Avenue I Scranton, PA 18503 I 1-844-VALORCU
Date
Member Name
Address
City, State, Zip
Dear Member,
The following changes will be made to our Kasasa® Checking Accounts for the qualification cycle ending
on January 30, 2016:
? Kasasa Cash will reward an Annual Percentage Yield of 1.00% to those accounts that qualify in a
cycle.
? The maximum refund amount that will be awarded to the Kasasa Cash Back accounts that
qualify in a cycle will be $5.00.
? Nationwide ATM refunds up to $10 will be awarded to all Kasasa accounts that qualify in a cycle.
Should you have any questions about these changes to your Kasasa accounts, please feel free to contact
us at 1-844-825-6728 or visit a branch to speak with a Member Service Representative.
We appreciate your continued membership.
Regards,
The Team at Valor CU
(If missed above)
You are all members of this FI
Time to use your voting rights.
What would be more clear to them?
An agreement is an agreement. You either uphold it, or you breach it. Valor did not 'breach' the contract as they always had an 'out' in the fine print of their disclosure statement which you had to sign in order to open the account. When you signed the certificate, in fine print under your signature it says "by signing this certificate, you are acknowledging and agreeing to the terms and conditions stated on the certificate and its accompanying disclosure statement. You can't **** about them changing the rules when they originally told you [in writing] that they could and you signed off on it!
You can however be disappointed that the 'all-you-can-eat' [or deposit] crab night is over. You can also be mad at yourself for not reading the fine print!, but you simply cannot 'blame' Valor for doing what it said it could do and you agreed to.
Now on a different subject....that being customer service and professionalism. I can honestly say that Valor CU provides the absolute WORST customer service and professionalism I have ever experienced. EVER! Even the actual CD itself is riddled with typos and non-nonsensical statements. In addition, many seasoned employees at various levels throughout the company are completely incompetent and have no idea what their products are. 'Misinformation' and focusing on what they 'can't' do for you seems to be their forté!
This was their latest, and last for me, game they are playing with their members. What's next a 3% withdrawal fee at maturity if not placed in a regular cd. They can do it by as they say they can do change the terms at any time. The more likely scenario is that they will be going under soon and I'd rather have the funds out of there now than wait for a distribution from the NCUA
It's not "bait & switch" however, unless you believe Valor calculated on this course from the very beginning, - in which case allowing Certificate holders to now back out of the deal (penalty-free) would eliminate all the potentially certain advantages to them of such a strategy. Why bait & switch and then voluntarily let the victims reverse the scam's effects?
There's no "gotcha" at work here, - but rather just a messed up organization now trying to deal with the consequences of its bad decisions.
They've suspended the add-on feature of the Certificate, and investors who find that onerous or offensive can now remove their funds without expense and go elsewhere.
So do so.
It's all unfortunate, annoying, and perhaps even disturbing.
But there's certainly nothing illegal going on, and in my judgment nothing unethical either.
The outraged and extremist reactions here are nothing short of astonishing.
To repeat the common phrase, - **** happens.
Move on, - with all your original investment (plus interest) intact.
You're comparing apples to oranges.
Mine is "problems DO occur, so you had better be perspicacious and careful, - and not fall apart when undesirable things sometimes happen."
Do I change my mind on the said CU? It is not even an issue. Never fall in love or hate with any FI (i.e., no emotions involved). It was a business decision on their part after the replacement of their top management. I do not need to form an opinion on them.
I have many RCAs that earn higher than 3%, hope that they will last longer (not counting on it). Again, life is full of surprises. No need to dwell on it. Just move on.
Happy New Year! :)
Note: Repost of Comment #132 for updated reference.
"If a deal appears to be too good to be true, it usually is"
gregk
The FED is raising rates, not because everything is hunky dory, but because they need to "reload" the rate gun in order to have something to do when the recession arrives from offshore. The alternative was/is NEGATIVE RATES, something European socialists are embracing. Once a cashless economy is established the little guy will be completely and forever enslaved to monetary and political forces beyond anything seen or imagined.
Motivations are always ambiguous and never definitive.
You merely project your own fears and desires here, without apparently realizing it, - and lacking such self-knowledge can't possibly offer any honest discriminations and genuine insights.
Message from the CEO Dear Members, As you may have read in the letters that were mailed (and emailed) out from our Board Chairperson in September, I recently joined Valor as interim CEO. I would like to take a moment to introduce myself and let you know how excited I am to be on board with this organization. Though it may appear that there are troubled times ahead, I can assure you that we are addressing all issues and formulating a plan of action to correct matters. As we focus on the positives within the organization with the staff, I also wanted to bring your attention to the many good things Valor has planned to help the community from now until the end of the year. Throughout the month of October, I encourage you to contribute to one of the fundraisers we will be hosting in our branches or plan to attend the 4th Annual Chili Cook-Off for a Cure on October 23rd. All raise money for Susan G. Komen Northeastern Pennsylvania’s Race for the Cure. In November and December, Valor will collect donations for Toys for Tots and the Angel Tree benefiting both the Salvation Army and South Scranton Head Start. Additionally, our staff has a long-standing tradition of donating gifts to the veterans at the Gino Merli Veterans Center in Scranton and, from what I have been told we are planning to do the same this holiday season. Finally, as a thank you to our members for your continued trust in us, we will be offering free goodies in all of our branches on International Credit Union Day which is being held on October 15th this year. It is a small gesture for certain, however we believe that the members need to be at the heart of everything we do and we are committed to that philosophy going forward. Please rest assured that the Board of Directors, staff, and I will continue to work tirelessly to maintain Valor Credit Union as a growing and multi-service financial institution for years to come. With kindest regards, Ed Fox Ed Fox Interim CEO
This dude has potential and is underutilized at Valor. He has not yet risen to his highest possible level of incompetence. Far larger financial organizations are desperately seeking executives with such a finely tuned tin ear as Ed so effectively has demonstrated.
Ed: You are the man.
The Valor team: WABOA
What the members want to know is why you terminated the add-on feature. If it's because of the deteriorating financial condition of the credit union, tell us specifically how this action is going to ameliorate Valor's finances. My reading of your financial statement would indicate the real culprit for the losses you incurred in the last quarter is because of runaway overhead and non-interest expenses. I would like to know what exactly are you doing to reduce this massive increase of overhead, which is running at least $2 million in excess of the prior year. Are you cutting staff, closing branches or reducing other administrative expenses? I would like to see real progress in this area before taking the inflammatory step of curtailing the add-on feature.
Please understand that most of your members feel they entered into a sacrosanct agreement with the credit union and you are violating it in a manner that you would never tolerate from your members. So you're going to have to do a lot better communicating with us than this feeble attempt to distract us with irrelevant information regarding chili cook-offs.
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Page Not Found The page you requested could not be found,
either contact support or try again.
Valor will be announcing a 3% processing fee to withdraw funds from any of their accounts on "January 15th. On January 16th Valor will be announcing an interest rate reduction on all existing accounts to .0001%"
Is this true? If so, does that mean NO withdrawal fee until !/15/2016?, Where is this info coming from? And if true, where is everyone going?
And everyone's complaining.
Valor was generous but dumb to even offer the CD, now still dumb but better calculating in fiddling with the terms. Need I say we all preferred combination one?
Valor could probably, [and mutually] get rid off ALL their Prime Rate Certificate holders by paying them the difference between what another institution is paying and Valors 3%.
Example: Say a Credit union is paying 2.6% for 6 years, and we are eligible to join, Valor would pay us the equivalent of 6 years x .04% of our deposited balance. [the difference in rate earnings over the term of the certificate]. We would then be free to close our Valor accounts [without penalty], and open new ones with a better institution. We would not lose any returns, and Valor would be relieved of their obligation since everyone went somewhere else. It would be so much cheaper for Valor to do this then to pay the full rate for the full term. And I quite frankly would rather deal with a different CU. Plus, the new CU would get a bunch of new money. It could be a Win-Win-Win for everyone involved. Seriously, think about it.
Besides here how many even got CD
We have a chance to boot out the backstabbing Board members in the election. I read through some bios are their are very intelligent folks looking to take over.
I I also find it so ironic that the I combusts wouldn't include a photos. Guess their too embarrassed to show their faces.
Vote againest eat the incumbents!!!
Voute the incumbents outs now.