Brought to you by:

1. Brought to you by:

2. Credit Union and Farm Credit System Tax Exemptions date back 80 and 100 years • Tax Code should not create winners and losers – like businesses should be treated the same • South Dakota Bank Franchise Tax Tax Policy Fundamentals

3. Credit Unions Pay No Tax • Federal Income Tax • South Dakota Bank Franchise Tax • State or Local Sales Tax Farm Credit Services – pays only a nominal amount Banks pay Federal Income, SD Bank Franchise and Sales Tax Federal Law Protects Some Providers

4. Credit Unions – $1 trillion tax exempt industry • Net Income of $9 billion in 2012 • Evolution of Credit Unions to a “Community Charter” - growth focus – with limited interest in people of modest means • Farm Credit – $250 billion arm of Federal Government • Net Income of $4.3 billion in 2012 • Return on Assets of 1.74% • Limited interest in serving young, small, beginning producers • New Revenue Would Help Reduced Federal Deficit • Credit Union Exemption = $2 billion • Farm Credit System Exemption = $1.3 billion Why should Congress Repeal the Exemptions?

5. Banks Serve More People of Modest Means

6. . • 80 to 90 % of loans are to older, well-established larger farmers • 1,714 South Dakota Farm Service Guaranteed loans - 99% were underwritten by Banks (as of 7/31/13) • FCS – financed luxurious vacation home for Hollywood producer in Black Hills Farm Credit – Mission Challenged!

7. FARM CREDIT: Mission Challenged.

8. National Stakeholder • You pay income taxes, Credit Unions don’t – Farm Credit Pays a minimal amount • Local Stakeholder • South Dakota’s Bank Franchise Tax benefits important programs - state and local Why is this important to you?

9. SD Bank Franchise Tax

10. 8 year avg. - $485,800

13. 8 year avg. - $203,300

15. 8 year avg. - $64,400

16. 8 year avg. - $59,500

17. Annual Cost of Tax Exemptions for South Dakota • Credit Unions $1 Million • Farm Credit $4 Million • TOTAL$5 million* • Local Government Share = $3.7 million (*Doesn’t include lost sales and use tax revenue on products and services purchased by federal credit unions) Cost of Protecting Status Quo - South Dakota

18. Bipartisan Congressional Focus on writing a simpler, more efficient, fairer tax code. • “Blank Slate Approach” – replace current policies that benefit special interest groups • Eliminate exemptions & increase taxable income • Lower rates across the board Tax Reform

19. Sign petition of support • Contact Senator Thune, Johnson and Representative Noem • Support tax reform, including repeal of tax exemptions for Farm Credit & Credit Unions. • Contact our your local Legislators • Support 2014 SD Legislature Resolution of support THE TIME TO ACT IS NOW It’s time to take action

20. 44 South Dakota Credit Unions • Assets = $2.6 billion Income = $21 million (2012) • Black Hills Federal Credit Union nearing $1 billion • SD’s Community Chartered Credit Unions • 28 Charters (63%) and $2.4 billion assets (93%) • SD’s Multiple Bond Credit Unions • 12 Charters (28%) and $118 million assets (5%) • SD’s Original Single Bond CU’s • 4 Charters (9%) and $55 million assets (2%) South Dakota’s Credit Unions