Letter from the CEO
We are wrapping up the 2nd quarter of 2010. After a tough four quarters in which the credit union had to absorb losses in lending, we have a profitable quarter. Losses, while still high, have started to taper off as the economy (and unemployment) seems to have bottomed out. PNWFCU is still adequately capitalized and has tightened its belt, as have many of our members, to make it through this recession.
One effect that members are feeling is the lower rates on deposits. I have had members call or email me about these low rates. As part of our fiscal responsibility for the credit union, we need to achieve a balance between our loans and deposits. Right now our members are acting prudently and paying loans down and thinking twice before taking on new debt. This is fiscally responsible behavior in today’s economic uncertainty.
The result of this conservative borrowing approach is that PNWFCU has excess liquidity (deposits that aren’t needed for lending). Our investment rate (what we get for excess deposits that we can’t lend) is less than one quarter of one percent (0.25%). Because of this, we have to balance our desire to pay dividends with the ability to generate investment income to pay those dividends. This results in lower dividend rates for our members’ deposits.
Economists are predicting that this low rate environment is going to continue at least through 2010. Overall these low rates are considered necessary for the recovery to keep from faltering, but results in a disappointing rate for our members.
We have an Asset/Liability Committee comprised of top management, board members and supervisory committee members that meet regularly to focus on these issues and ensure that we pay the best rates that we can while meeting our fiduciary responsibility of keeping the credit union fiscally strong. This committee will continue to pay close attention to rates for both deposits and lending throughout this recession and recovery.
For members that need a higher yield or who are looking for different investment options, I ask you to consider meeting with James Hull, our CFS Financial Advisor*. He would be happy to meet with you to discuss your financial picture and investment needs.
| Thomas E. Griffith, CMA Chief Executive Officer |
Your Insured Funds
Not only is our credit union sound and stable, every credit union in Oregon is federally insured by a fund that is backed by the full faith and credit of the U.S. government. Congress recently passed the Helping Families Save Their Homes Act of 2009, which includes a provision extending the $250,000 National Credit Union Share Insurance Fund (NCUSIF) coverage through December 31, 2013.
Update 7/22/2010: President Barack Obama yesterday signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Included in this sweeping legislation are provisions making permanent the current $250,000 maximum federal deposit insurance level, which had been temporary until December 31, 2013.
Some examples of account insurance coverage include:
- Individual accounts: Deposit accounts (other than IRA accounts) owned by one individual are combined and insured to $250,000.
- Joint accounts: Accounts with two or more owners are combined and insured to $250,000 for each joint owner.
- IRAs: IRA accounts are combined (Roth and Traditional) and insured to $250,000.
To review NCUA's brochure on additional account coverage, click here. You can also use their online Share Insurance Estimator. Click here to watch a commercial that explains how your funds are safe with federally-insured credit unions. The NCUA now also has a call center available to answer insurance questions between 8 a.m. and 6 p.m. (EDT), Monday - Friday. To reach them, call 1-800-755-1030, extension 1.
