As many of you know, the National Credit Union Administration, or NCUA has announced plans to assess a special premium to all 8,000 plus “natural person” credit unions. All credit unions that serve members are “natural person” credit unions. NCUA has taken this action to accomplish several national objectives including providing assistance for “corporate” credit unions that serve credit unions nationwide. Corporate credit unions serve many of the same functions for “natural person” credit unions as the Federal Reserve system has traditionally provided to most banks. They act as correspondent financial institutions for “natural person” credit unions providing services such as daily check clearings, ATM and debit card settlements, as well as credit card activity. They also provide investment services for “natural person” credit unions with excess liquidity. The corporate credit union system is wholly owned by the individual “natural person” credit unions that it serves. There are 28 corporate credit unions in the United States. The “natural person” credit union system remains healthy and sound.
This premium is based solely on the dollar amount of federally insured deposits each of these credit unions have. On March 23, 2009 the NCUA announced that all “natural person” credit unions will be assessed 69% impairment to the share insurance fund deposit and also a premium assessment of 0.30% of insured shares as of December 31, 2008.
What does this mean?
Florida Hospital Credit Union will pay $242,145.00 for the mandated special assessment and premium as required.
Is Florida Hospital Credit Union safe?
As many of you know, FHCU has established itself as a very strong and financially stable credit union over the past 53 years. We have over $4 million in capital and our capital ratio remains well above the highest tier suggested by our regulators.
Are my deposits secure?
Yes. Members can be assured their money is safe in their credit union, and in fact no one has ever lost a penny of federally insured deposits in a credit union. Deposits at your credit union are federally insured to $250,000 by the National Credit Union Share Insurance Fund (the NCUSIF), backed by the full faith and credit of the U.S. government.
Does FHCU have investments in the corporate credit unions?
Yes, but all our deposits at corporate credit unions are fully insured by the federal government (NCUSIF). Our investment portfolio is very conservative, and we hold none of the high risk “sub-prime” mortgage backed investments that lead to the current financial turmoil.
How will FHCU pay for this?
Fortunately we have a strong capital well in excess of the highest levels suggested by the NCUA. FHCU will expense the assessment & premium in March 2009 which will in turn reduce our capital. However, our capital will remain more than adequate as determined by the credit union regulators.
Will this impact the cost of my loans, fees I am charged, or interest I earn?
FHCU will make every effort to ensure that the action taken by the NCUA has minimal impact on our ability to continue serving our 8000 members. We can and will continue lending, offering a safe place for our member’s savings, and the many additional services we offer at no or low-cost.
How will FHCU cut back its expenses to help recover this?
FHCU operates on an extremely conservative budget. Most of the earnings are given back to our members in no-cost / low cost services. FHCU is a not-for-profit organization. The assessment of $242,145.00 represents approximately three years of net earnings for the credit union. Without doubt this will have an adverse action on our earnings and capital. In an effort to help recover the costs, we are forced to cut back on staff and reduce operating hours at 3 of our non busier branches. Our products/services, quality and excellent member service will not be compromised.
As always, the board of directors, management and staff thanks you for your business and continued support.
