Safety and Soundness at USE Credit Union

 

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Dan Mica, President and CEO of the Credit Union National Association and a former member of the U.S. House of Representatives, explains how credit unions are safe, sound, strong - and virtually all are federally insured (USE is among the federally insured credit unions):

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Read more about Safety and Soundness at USE Credit Union.

The recent failure of a very large bank has put the spotlight on the risks inherent in having a concentration of subprime mortgage loans in a bank’s loan portfolio. USE Credit Union members can rest easy. USE Credit Union has never participated in subprime or other non-consumer friendly mortgage lending, and proudly maintains a well-performing loan portfolio, indicated by one of the lowest loan delinquency and charge-off rates, well below other banks and credit unions in our markets. Even with these positive numbers, USE has taken extra precaution to build our reserves to protect against future potential losses, and maintains one of the best reserve ratios among our peers.

With a capital ratio well over the minimum required for a “well-capitalized” financial institution, USE Credit Union is a safe and secure place for depositors and borrowers. Since 1936, USE Credit Union has worked hard to serve as our members’ trusted financial partner. As a not-for-profit financial institution owned by members, USE is focused on doing what’s best for the membership. Conversely, banks, who are owned by shareholders, make decisions that drive profits to benefit shareholders, not their customers.

Here's what you need to know:

• Not one penny of insured savings has ever been lost by a member of a federally insured credit union.  USE Credit Union is federally insured by the NCUA.
• Consumers saved $10.9 billion last year by using credit unions rather than banks. The savings come in the form of lower fees, higher savings rates and lower loan rates.
• Credit unions have steered clear of the subprime mess, and continue to lend responsibility.  USE Credit Union, in particular, has never participated in sub-prime or other non-consumer friendly mortgage lending.
• Credit unions do not have stockholders and the value of a credit union is not driven by the value of its stock.
• Credit unions are owned by members, and credit union capital is built from excess earnings accumulated over time.  USE Credit Union, founded in 1936, today has $66 million in reserves, translating into a capital ratio in excess of what's required by regulators to be "well capitalized."
• USE Credit Union maintains a well-performing loan portfolio, indicated by one of the lowest loan delinquency and charge-off rates, well below other banks and credit unions in our markets. This is because USE's membership consists of individuals with higher-than-average credit scores, higher deposit balances, more conservative borrowing behavior, and better paying habits.
• Deposit insurance only comes into play when a financial institution fails, and the important hedge against failure is a combination of a healthy loan portfolio and adequate reserves (capital).  USE offers all three: NCUA deposit insurance, a well-performing loan portfolio, and capital in excess of the regulatory requirements.
• Members can get more than $1 million in deposit insurance coverage, depending on the types and ownership of their accounts.  USE can help members determine how to get additional coverage.
• USE Credit Union is focused on being our members' trusted financial partner.  As a not-for-profit, we will not trick someone into a loan so we can make a fast buck.
• In the wake of bank failures, USE Credit Union is a safe harbor for members' deposit and loan relationships.