IS MY FINANCIAL INSTITUTION SAFE?

BY:  BARBARA MATHEY

There has been a lot of troubling news about the financial industry over the past few weeks.  Those of us at the Credit Union understand how concerned some of you may be and we would like to share our thoughts and assurances.  If you think back to the recession we lived through starting in 2007 you may remember that, in part, it was caused by careless financial institution behaviors with investments in real estate and real estate development.  Proper due diligence had not always been done and this resulted in sizeable losses and institution failures.  It should have been a learning experience for anyone working in the industry.  So why are we having more trouble in the banking industry and do we have a reason to be scared? 

We have been paying close attention to the news and hearing the concerns and cautions from our regulators and we are confident that we have done nothing that could cause us any undue problems.  Your Credit Union takes your safety and security very seriously and we value the trust and confidence that you place in us.  Throughout the last several years of low interest rates, we have taken great care to be cautious in our investing in spite of the fact that it was very difficult to make even a minimal return on our money.  If you work in the financial industry you know that what is high will drop and what is low will raise.  The only way to get a slightly higher return was to invest in items that would diminish in value as rates inevitably rose.  The institutions that have failed are said to have had an investment portfolio that dropped in value so quickly and drastically that when they “marked” their portfolio to actual market value, their reserves were not sufficient to cover the losses.  Now we are sure that there were many reasons for the failures that occurred but we would rather talk about how we have cared for the assets of our members to avoid any of these problems.

First, I can tell you that the Credit Union has just gone through our NCUA Exam, a thorough examination of all of our practices and the actual value of our investment and loan portfolios.  We are happy to say that the results of the exam were excellent and we are proud of our accomplishment.  We understand how the markets work and we have always taken a conservative approach.  We did not take on any risky investments just to make a few extra dollars and hope that nothing went wrong.  We invested wisely and maximized our returns while maintaining our risk at low levels.  We have kept our reserve level growing and should end March over 8% (well capitalized is 7.0%).  Our members continue to request loans and we are carefully evaluating qualifications and will be keeping our loan rates as low as possible and the quality of the portfolio good. 

Finally, our assurance to you is that we will keep your money safe and we will continue to earn your trust.  We will protect your hard-earned assets and give you the peace of mind to feel good about the financial partner you have chosen.