Today's Headlines | North Carolina Credit Union Network

NC Credit Unions Shine As Credit Crisis Roils Banks, Wall Street (9/19/2008)

In This Story:

Radebaugh: Credit unions are "safe haven."
Credit unions not dependent upon stock market moves for funding.
Many NC credit unions report growth in membership, deposits.
Summit CEO Whitehurst: "We have purposely decided not to pull back our lending during this difficult economic time."
Find A Credit Union searches surge 62% in second quarter.

See Also: CNN Touts CUs As 'Calm in this economic storm' (click here)

"It’s natural for people to see the headlines and wonder if their money is safe," said NCCUL President/CEO John Radebaugh. "Not only are credit unions safe, they’re a safe haven in this economic storm."

As other financial institutions curtail lending in order to deal with the unfolding credit crisis, NC credit unions continue to help their members weather the economic storm, the NC Credit Union League (NCCUL) said today. The announcement came as many consumers worried about the state of the economy and the banking system.

Radebaugh noted that credit unions are fundamentally strong and a number of credit unions are reporting strong loan growth in 2008. "Credit unions made prudent lending decisions when other lenders didn’t, and so there’s no need for them to cut back on lending now." He added that as cooperatives, credit unions do not rely on the stock market for funding.

As credit unions continue to stand out, NC consumers are taking note. The League offers a credit union locator service, called Find a Credit Union, on its web site. This site allows NC consumers to search for credit unions in their community that they may be eligible to join. "Over the past few months, we’re seeing a lot more searches on the site," Radebaugh said. In fact, Find a Credit Union searches surged 62% in April – June over the first three months of the year. (To search for a credit union, you may go to http://www.findacreditunion.com/.)

Radebaugh also noted that deposits at all NC credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF). NCUSIF, which is funded by credit unions and not taxpayers, provides up to $100,000 for individual accounts, and $250,000 for retirement accounts. This coverage and the guarantee is the same as that of the FDIC.

The League's comments echo that of the Credit Union National Association (CUNA), as Chief Economist Bill Hampel weighed in on the current economic climate as it related to credit unions (NewsNow September 17, 2008). Hampel acknowledged that the economic climate was tough and that it would remain so well into next year, but he encouraged credit unions to, "ride it out."

Across the State, credit unions are showcasing their strength and continuing to provide outstanding service to their members:

Carolina Postal Credit Union (Charlotte)

Loans are up – more than $1.2 million year-to-date
CPCU is refinancing members’ mortgages with other institutions that are delinquent or that may have been caught in a sub-prime trap
Offering a "Switch & Ditch" auto loan enabling members to bring their auto loans to CPCU for a lower rate and $50 gas money!
Offering Visa Credit Card with a low rate & no annual fee
CPCU membership continues to increase – the credit union opened a branch in Greensboro recently in response to requests from that market
New checking accounts are surging
Delinquencies are low and trending down. CPCU attributes this to its efforts to work with members from day one and not wait 90 days until members are in over their head
CPCU's capital level is more than double than the required 7%, standing at 15.99%

Champion Credit Union (Canton)

Champion Credit Union rolled out a Fresh Start Auto Loan earlier this year that allowed members to refinance their auto loan to a lower rate and save money on their car payments. The credit union also announced this week it is adding a Stay Warm Fuel Loan program in order to help members get low-cost loans in order to heat their homes this winter.

"A lot of folks are having a hard time making ends meet, and we’re in a strong position to help people weather the storm." -- Mike Clayton, Champion CU president/CEO.

Charlotte Metro Credit Union (Charlotte)

"Charlotte Metro Credit Union’s mortgage portfolio has remained exceptionally strong during this period of turmoil in the public banking sector. And this success was by no means a result of our standing on the sideline. Our Credit Union has continued to help our members realize achievable dreams through a consistent and diligent lending process.

Over the last 12 months, Charlotte Metro has originated 173 mortgages totaling $29.8MM. This is up from 97 loans booked at $15.7MM for the year before, a 90% increase! Delinquencies also remain low with only a few accounts over 30 days past due.

Randy Kegarise, Charlotte Metro’s Loan Administration Manager, attributes our performance to aggressive pricing on our ARM products and an attractive "no PMI" feature on many of our mortgage products." -- Nathan Tothrow, Charlotte Metro CU VP of marketing.

Coastal Federal Credit Union (Raleigh)

"Coastal is having a very strong year. It all stems from our commitment to being a responsible lender and maintaining a clean portfolio. We never engaged in subprime mortgage lending and instead focused on making sure our members could afford the homes they were buying, not just the initial payments.

As a result, out of more than 4,000 mortgages on our books, we only have a very small handful that are even delinquent… and none are in foreclosure. While other lenders have been forced out of the mortgage business, we're poised to double, possibly even triple, our volume in the next year.

There's nothing glamorous about doing the right thing, but it's essential that we keep doing it: providing access to solid products and services, at good rates and with fair, reasonable fees. People need to know that their financial institution will be there for them, especially in times of uncertainty. The last thing someone should have to worry about when they go to sleep is whether or not their institution will still be in business when they wake up. I think that's why they're finding credit unions so attractive today; they know that we'll still be here tomorrow." - Joe Mecca, Director, Community & Corporate Relations

More than 5,600 new checking accounts this year.
56% growth in checking balances
Added more than 13,600 new members since Jan 1. (8.5% growth)
Deposits up 14%
Loans up 20%
Mortgage portfolio up 12.5%

Local Government Federal Credit Union (Raleigh)

"In economic times like these, credit unions have historically been the shelter in the storm. The growth our credit union is experiencing right now directly reflects this. While many financial institutions are going bankrupt and closing their doors, we have seen membership numbers grow by more than 10,000 people in the past year, we have seen total assets and deposits grow by approximately 20 percent, and total loans grow by 33 percent.

Our message to our membership is that there is no credit crunch at their credit union. In fact, credit unions, as a whole, have low rates and money to lend, meaning now is a good time to take out a loan with a responsible, stable lender. From our numbers, this message is being heard loudly and clearly." -- Maurice Smith, Local Government FCU president/CEO.

Lion's Share Credit Union (Salisbury)

"Lion's Share members are really appreciating their credit union in this challenging economy. Loan activity surged this summer as members found their credit union was more than happy to lend to them when other institutions could not. We are also happy to report that shares (deposits) are also rising at a healthy clip as members look to safely lock up their savings with an institution they know and trust." -- John McGrail, Lion's Share CU president/CEO.

Members Credit Union (Winston-Salem)

"We have experienced a 2.22% increase in total assets and a 1.23% increase in net loans in the past 12 months. Membership also continues to rise at a steady clip. Word seems to be getting out that credit unions are a more consumer-centric option - economic crisis or not. The recent bank failings have just highlighted this point.

We have not been directly affected by risky or predatory lending practices because we believe in the the credit union philosophy of "people helping people". Taking advantage of consumers with complex loan packages is not helping people. That's what draws our member-owners to Members Credit Union. Profiteering, misleading fine print, and predatory lending practices have no place here - our volunteer board, member-owners, and executive management team make sure of that. That is why we remain optimistic that consumers will seek financial safe-haven from bank woes in the arms of credit unions." -- Matt Davis, Members CU director of public relations.

Summit Credit Union (Greensboro)

"We have purposely decided not to pull back our lending during this difficult economic time. We feel this is the right decision for our members and for Summit Credit Union. We have plenty of good, hard working members who need the credit union to be available for them during this economic cycle. We have resisted tightening up our lending standards; while, other financial institutions are modifying their programs to assist only the most credit worthy." - Sam Whitehurst, Summit CU president/CEO.

Total Loan growth $9.2 million year-to-date (up 12.58% YTD or 18.87% annualized YTD)
Home Equity Loans up over $7 million YTD
Credit Card Balances up over $1.2 million YTD
Auto Loans up over $617 thousand YTD