Tom Glatt
To our members
On Friday, July 11, 2008, the Federal Deposit Insurance Corp. (FDIC) took over the operations of IndyMac Bancorp in Southern California. The thrift – the fifth U.S. bank to fail so far this year – had total assets of $32 billion as of March 31. It is expected that other U.S. banks may fail in far greater numbers following the collapse of IndyMac, a significant mortgage lender, straining a financial system seeking stability after years of lending excesses. It is forecast that more than 300 banks could fail in the next three years, according to prominent banking consultants and analysts.
I want to put your mind at ease if you have any concerns relative to Continental Federal Credit Union's safety and soundness.
Point 1: Continental Federal Credit Union is one of the nation's strongest financial institutions (credit unions, banks and savings banks) with reserves (capital or net worth) in excess of 15.0% - more than DOUBLE the level of reserves required by our regulator to be considered "well capitalized," almost 40.0% higher than the credit union national average for reserves, and almost 50.0% higher than the bank national average for reserves.
Point 2: Continental Federal Credit Union's management team, both Board and Executives, is also among the best in the nation. One of our Board members was recently honored as the 2007 Volunteer of the Year by Credit Union Times, and our Executive Team has been nationally-recognized for excellence in 2008, receiving two very prestigious national awards so far this year.
Point 3: Most of the banking losses this year are a result of banks (and some other credit unions) getting heavily involved in risky "sub-prime" mortgage loans. Less than 40.0% of Continental Federal Credit Union's total loans are in real estate (the national credit union average is greater than 50.0% and the national bank average is approximately 55.0%), and NONE of our real-estate based loans are of the risky "sub-prime" type. Our loan losses remain low.
Point 4: Your deposits are federally-insured by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund created by Congress in 1970 to insure members' deposits in credit unions up to the recently increased $250,000 federal limit. The fund is administered by the National Credit Union Administration and is backed by the "full faith and credit" of the U.S. Government. No federal tax dollars have ever been placed in the credit union financial Fund, and no member has ever lost money insured by the NCUSIF.
If you, as a member-owner of Continental Federal Credit Union, have any questions or concerns regarding our safety and soundness or long-term viability, please contact either Alistair Harper, our EVP/Chief Operating Officer, at 480-642-6480 x5102 or me, Tom Glatt, CEO, at 480-642-6480 x5101. Be assured that your credit union is in great shape, from both a financial and a managerial standpoint. Thank you all.
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