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2. Tax Policy Fundamentals 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

3. Federal Law Protects Some Providers 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

4. Why should Congress Repeal the Exemptions? 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

5. Banks Serve More People of Modest Means

6. Farm Credit – Mission Challenged! 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.

7. FARM CREDIT: Mission Challenged.

8. Why is this important to you? National Stakeholder You pay income taxes, Credit Unions dont – Farm Credit Pays a minimal amount Local Stakeholder South Dakotas Bank Franchise Tax benefits important programs - state and local

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. Cost of Protecting Status Quo - South Dakota 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 (*Doesnt include lost sales and use tax revenue on products and services purchased by federal credit unions)

18. Tax Reform 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

19. Its time to take action 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

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