How Safe is Your Money?  Posted: Sep 19, 2008  Update (10/6/08): A law enacted Friday, October 3, creating a Troubled Assets Relief Program to help credit markets, also effects an immediate increase to $250,000 the federal share and deposit insurance limit through Dec. 31, 2009. This article has been updated to reflect this change.  With the current financial crisis in the headlines each day, staff may be wondering how safe their money is in the Bank-Fund Staff Federal Credit Union. CEO and Managing Director Stephen D. Breed answers some common questions about NCUA Share Insurance.  Are the funds I've deposited with the Credit Union federally insured? Yes. Share accounts in federally-insured credit unions such as Bank-Fund Staff Federal Credit Union are insured by the National Credit Union Association (NCUA), an agency of the U.S. Federal Government, up to the standard maximum share insurance amount. This amount is currently $250,000 (until December 31, 2009).  Insurance coverage on certain retirement accounts, such as IRAs and Keoghs, is even higher—currently $250,000.  | 
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 What if I have more than $250,000 in deposits? Is there a way to get all the funds insured? If you have different ownership interest or rights in different types of accounts, it is possible to have more than $250,000 insured.  For example, a husband and wife could have several accounts at the Credit Union, each separately insured, allowing them to keep substantially more funds at the Credit Union with every dollar protected by share insurance.  Here's an example: Husband's individual account | insured to $250,000 | Wife's individual account | insured to $250,000 | Husband & wife's joint account | insured to $500,000 | Revocable trusts       Husband as wife's trustee       Wife as husband's trustee |  insured to $250,000 insured to $250,000 | Husband's IRA | insured to $250,000 | Wife's IRA | insured to $250,000 |
     In the scenario above, the total amount of insurance is $2,000,000. With a husband + wife + child(ren) scenario, and different account ownership structures, the total amount of insurance can be even greater.  You can visit http://www.ncua.gov for more information, or just stop by the Credit Union to get a comprehensive NCUA brochure on share insurance and more information on types of account ownership.  I have a Money Management Account at the Credit Union. Is that insured or not? Yes, the Credit Union's Money Management Checking and Money Management Savings Accounts are part of our share account suite of products and services and are insured by the NCUA.  Does the credit union have IRA accounts? If so, are they insured? Yes, the Credit Union offers several different types of IRA accounts. These accounts are insured up to the NCUA maximum (currently $250,000).  Is there any effect on credit union mortgages and loans? BFSFCU never really entered the sub-prime arena when so many mortgage lenders were moving in that direction, so we did not have to 'reinstitute' sound underwriting principles.  Many lenders have had to greatly modify their current underwriting standards as a result of the sub-prime fallout. Not BFSFCU. We never lowered our underwriting guidelines to accommodate sub-prime loans.  Notwithstanding, we do monitor our guidelines closely and 'tweak' them as needed. In general though, our high level liquidity places us in a good position for meeting our member's loan needs.  In terms of the 'performance' of the mortgages and loans in our portfolio, we have the rather distinct advantage of serving a very financially-astute, creditworthy membership. While we have seen some increase in delinquencies and loan losses, that increase is far below what many other financial institutions are experiencing.  Does the credit union have any exposure risks in the current downturn? If so, how does it manage those? The credit union is safe and secure during this current market downturn. As of June 30, 2008, our capital-to-asset ratio was 14.5 percent, which compares quite favorably to other financial institutions.  As of the same period, the credit union industry average was 10.9 percent and the banks average was 10.16 percent. We follow sound underwriting guidelines in our lending operation.  As of June 30, 2008 0.43 percent of our loans were delinquent, while at the same time the credit union industry had a delinquency ratio of 1.05 percent and the banks were at 2.04 percent. The majority of our excess liquidity is invested in US Treasury Notes and Federal Funds, which are kept on deposit at AAA rated banks.   |
