Thursday, July 10, 2008

Credit Union Investments

I thought that this information might be helpful. Financial markets worldwide are getting quite a bit of media attention these days. This is a quick summary of what we do with funds deposited into the credit union.

For our current level of member shares deposited in North Alabama Educators Credit Union, we currently lend that money out to other members roughly 70% of the time. The credit union has never engaged in “sub-prime” or “exotic adjustable rate” loans. There has only been one foreclosure realized since 2001 and that foreclosure was due to the member passing away. Our loan delinquency is very low. As of March 31st (The last reported date for peer averages), our ratio of Delinquent Loans to Total Loans was only 0.15% as compared with the industry peer group average of 1.08%. We have good quality loans on our books which is also a reflection of the quality membership that we have. (It also reflects good collection efforts!). We continue to lend money to our members. We have realized over a 14% increase in member loan balances since June of last year.

Our other investments are fairly conservative. Certificates of Deposit, Corporate Credit Unions, and U.S. Government backed bonds & securities comprise our portfolio. The outstanding balances on our current bonds and securities only represent 3.2% of the total assets of the credit union. We do not own any foreign investments.

Safety of member assets is our priority. The credit union has ample liquidity to meet our member needs. The credit union does have a cap on internal long-term mortgage loans held which is 20% of our Total Assets. This is why we do not always have internal mortgage money available for member funding. The cap is a safety and soundness tool to reduce interest rate risk in a rising interest rate environment.

Our CU Members Mortgage program is now available for mortgage financing throughout the year.

Complete financial statements of North Alabama Educators Credit Union, as well as all other federally insured credit unions, are available at

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