America/'s Credit Unions: Secure, Strong
America’s credit unions: Secure, strong
With federal insurance, serving as consumers’ safe harbors
Credit unions as a whole are healthy, with strong balance sheets.
• Credit unions are well capitalized. Their overall capital-to-asset ratio stands at a very solid 11% (compared
to 10% for banks). In dollars, that’s a capital cushion of $90 billion.
• Credit union mortgage delinquencies at mid-year stood at only 0.7%. First mortgage charge-offs were a
miniscule 0.06%.
• More broadly, credit union loan delinquencies have edged up, but still are at a very low 1.0%.
Credit unions have steered clear of the subprime mess. We’re still lending responsibly.
• In the first eight months of 2008, mortgages at credit unions grew faster than all other loans. This at a time
when mortgage losses have forced other lenders to scale back or close their doors entirely.
• Why? For one thing, credit unions operate more conservatively and tend to hold more of their mortgage
loans (about 70% in fact) in portfolio rather than sell on the secondary market.
• Secondly, credit unions are member-owned and not-for-profit cooperatives. We exist to serve our members,
not profit from them. Unlike the banks and brokers, we’re not out to force loans on our members just to make
a quick buck.
• Today 56% of credit unions offer first mortgages, and 90% of the nation’s 90 million credit union members
belong to one of the credit unions that offer first mortgage loans.
• To the extent credit unions have been impacted by the subprime debacle, it’s primarily as “collateral dam-
age”—members having trouble making payments on other loans because of subprime mortgage they’ve got-
ten elsewhere, or because some members are losing their jobs in today’s down economy.
• But credit unions went into this with very strong balance sheets, and will still be in very strong shape when
it’s over.
Credit unions are a safe harbor for consumer savings.
• Savings at credit unions so far this year have grown nearly 6%. In today’s economy, consumers are in-
creasing their savings in response to concerns about their economic future.
• More people seeking to put their money in a stable source offering good rates are turning to credit unions.
• As not for profit cooperatives, credit unions typically offer higher savings rates than banks. For a daily rate
comparison, go to this link: http://www.creditunion.coop/ratedex.php
• 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. That works out to about $126 per credit union
member or $239 per household.
Federal insurance covers credit unions, too.
• All credit unions in this state are federally insured by a fund that, like the FDIC, is backed by the full faith
and credit of the U.S. government.
• As the FDIC does for banks, the National Credit Union Share Insurance Fund (NCUSIF) insures savings in
credit unions of at least $250,000 per account (with additional coverage of up to $250,000 for certain retire-
ment accounts).
• The NCUSIF is administered by the National Credit Union Administration (NCUA), an agency of the federal
government. To determine insurance coverage, see the NCUA’s insurance estimator at: http://
webapps.ncua.gov/ins/
• The NCUA recently reported that the NCUSIF at mid-year remained strong, with an equity-to-insured de-
posits ratio estimated at 1.22% as of June 30 and projected to rise to 1.28% by year end.
• For more information on federal share insurance, see the NCUA brochure “Your Insured Funds,” available
at the link here: http://www.ncua.gov/Publications/brochures/insured_funds/funds.pdf
Presented by Credit Union National Assn. (CUNA), Washington, DC/October, 2008
