By Luke Britt/Editor
When officials with Origin Bank appeared before the Union Parish Police Jury’s Finance Committee meeting Tuesday the jurors were largely silent, but citizens in attendance were not and pressed the bankers on why the parish’s largest account has for years earned a shockingly low interest rate.
“Origin Bank has been loaning out our millions and making money off it for years while paying the parish next to nothing,” said Judy Auger, a citizen who attends most Police Jury meetings. “Someone has to be held accountable, whether it’s the bank, the auditor or the jury or maybe all of them.”
Auger was one of several citizens who turned out for the usually quiet finance committee meeting and expressed their dissatisfaction directly to the jury and to the Origin Bank officials on hand.
The interest issue came to light during last month’s Police Jury meeting when retired Farmerville Police Chief George Cothran questioned why the parish’s $9.7 million Landfill Assurance Trust Fund earned only $4,000 in interest during the past year, which translates to an interest rate of only .0004 percent (four ten thousandths of a percent).
At Tuesday’s meeting, Origin Bank Executive Vice President Larry Little, speaking to the jury and others in attendance, defended the interest rate, saying it reflected a volatile economy in which banks must be cautious with the interest rates they pay.
Origin Bank’s Chief Communications Officer Ryan Kilpatrick said the bank cannot, by law, discuss the specifics of any customer account, but in an email responding to questions from The Gazette Kilpatrick wrote, “We are working with the Union Parish Police Jury to address concerns that have recently been brought to our attention. Origin has a more than a century long commitment to Union Parish, and we remain dedicated to honoring that commitment.”
The Landfill Assurance Trust Fund account is a state mandated account intended to ensure that funds are available to maintain the landfill and ensure no environmental contamination occurs for up to 30 years after it closes. State law requires the parish to deposit hundreds of thousands of dollars a year into that account, and because the funds cannot be used until the facility closes, the account has grown year after year into Union Parish’s largest pile of public money.
The fund and the state laws that govern it are codified in a Trust Fund Agreement that the bank holding the account, in this case Origin Bank, must agree to. Once that agreement is in place, changes to the account, such as moving it to a new bank, require a new trust fund agreement.
The trust fund agreement currently in place was created when the account was placed with Origin Bank in 2008. Police Jury President Brenda Abercrombie said the jury has been operating under the belief that everything about the account was dictated by state law and, thus, could not be modified.
“We were wrong about that,” Abercrombie said, “and I think we should all be grateful to Mr. Cothran for bringing this to our attention. This is a great example of why it’s so important for people to take an interest in their government. When they ask questions we can’t answer, we have to find the answer, and that’s how we learn. That’s how we make the parish better.”
Abercrombie said that within days of Cothran’s inquiry, the jury invited area banks to submit proposals that would improve the account’s interest earnings.
At Tuesday’s meeting, Louisiana National Bank and Origin Bank both responded with proposals that offered significantly higher interest rates than the account has been earning. Origin Banks’s proposal included an interest rate offer of 4.88 percent, while LNB offered an interest rate of 5 percent.
At 5 percent, the Assurance Fund’s $9.7 million balance would generate in excess of $450,000 interest a year, which, ironically, is very close to the average amount the parish deposits into that fund.
“What I’m hearing is that, if they had been paying us a fair rate all along, the interest earned would have covered most of the money the parish has to deposit in that account every year,” police jury watcher Auger said. “So we’re not talking about thousands or even hundreds of thousands of dollars lost. We’re talking millions.”