CORPORATE CREDIT UNION STABILIZATION

posted: Monday, March 23, 2009

You may have heard or seen media reports that two corporate credit unions were taken over by federal regulators March 20. The National Credit Union Administration (NCUA) placed the US Central Credit Union and Western Corporation Corporate Credit Union (WesCorp) under conservatorship. This means that NCUA will be making the decisions on management of these institutions. Corporate credit unions do not serve consumers but provide products and services to retail, or "natural person" credit unions, like SAFE.

What does this mean for SAFE? We have no investments with WesCorp and no direct relationship with US Central. SAFE uses The First Carolina Corporate Credit Union in North Carolina for various business services and our deposits there are federally insured up to $250,000.

It is business as usual for SAFE members, despite the tough economy. NCUA's action has no impact on our ability to continue serving members with their deposit and loan needs. Financially, SAFE had our best year ever in 2008. Even after paying bonus dividends and loan interest rebates we retained our largest net income in SAFE's history.

SAFE will be affected by the corporate situation because regular credit unions have always maintained their own deposit insurance through the National Credit Union Share Insurance Fund (NCUSIF). No taxpayer dollars are being used for the corporate credit unions. The premiums credit unions pay to NCUSIF will be increased. Although NCUA's action does not immediately affect SAFE it means that we have to provide additional support to our insurance fund in the fall. We do not anticipate any other impact and do not think that the amount of support required from us will cause us to have less than adequate net worth going forward. SAFE remains well-capitalized and we expect that our capital will remain above the 7% NCUA requirement.

Additional Resources

>> NCUA Conserves Corporate Credit Unions

>> Corporate Credit Union Actions

>> 2008 Annual Report

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