A Statement on Credit Unions in Texas from Dick Ensweiler, President and CEO, Texas Credit Union League

Mar 22, 2009, 00:27 ET from Texas Credit Union League

Core Fact: The conservatorship of two wholesale credit unions will not have an impact on funds of credit union members - nor deposits of credit unions in their wholesale system.

DALLAS, March 22 /PRNewswire/ -- On Friday, the NCUA took into conservatorship two "corporate credit unions," that is, credit unions which do not serve consumers, but act as central wholesale facilities for everyday credit unions. These two corporate credit unions (one in Kansas and the other in California) are part of a system of 28 separate wholesale credit unions, and they remain operational.

Credit union members across the state are not directly impacted by this action, their deposits remain insured to at least $250,000. Because deposits in corporate credit unions are also insured (beyond the usual $250,000), even credit unions funds in those institutions are not at risk. Also, the corporate credit union serving Texas, was judged by the NCUA to be able to "weather the economic storm."

Here are some important facts about credit unions in Texas that remained unchanged even with this news:

Credit unions in the state are very well capitalized. Our capital cushion is stronger than most banks. As an industry, our average capital-to-assets ratio is more than 10%. That's considerably higher than the 7% industry standard for being "well capitalized" and higher than the banking industry's average of about 9%. This 10% capital means credit unions are well positioned to absorb the costs of this action by the agency (which intends to charge higher deposit insurance premiums) with minimal outward impact on our members.

Loan growth statistics make this clear Texas bank loan portfolios grew by just 2% in 2008 while Texas credit union loans grew by 8.6%. Loan portfolios of all US banks posted a 0.4% decline in 2008 - among the nation's credit unions portfolios grew by 6.7% in the year.

Further Background: Corporate credit unions operate in the capital markets and hold highly rated, invest grade securities. But like so many others in those markets, they have seen the value of their investments decline in the current economic downturn, resulting in some actual losses. According to the NCUA and press accounts, in the case of these two corporate credit unions that were written about in the press, the losses were significant enough so that the government had to step in.

For more about federal savings insurance at credit unions, see the "America's Credit Unions" website at www.creditunion.coop.

To determine how much of your savings at your credit union is covered by federal insurance, visit the NCUA insurance calculator at http://webapps.ncua.gov/ins/

About Texas Credit Union League

Where you can find us:

Online at www.tcul.coop

Facebook at www.facebook.com

Twitter at www.twitter.com/tcul

Blog Talk Radio at www.blogtalkradio.com/tcul

The Texas Credit Union League is the official trade association for credit unions within the State of Texas. The League represents, on a state and federal level, nearly 600 credit unions state-wide, which are owned by over 7 million members (about one-third of the state's population). Organized in 1934, the Texas Credit Union League protects credit unions and promotes their growth, strength and unity. It accomplishes the mission through advocacy services, regulatory and compliance advice, training and event activities, marketing and public relations actions, and by delivering innovative, high value and profitable business solutions to the members. For more information, visit www.tcul.coop and www.creditunionmember.org; write to us at 4455 LBJ Freeway, Suite 1100, Dallas, Texas 75244, or call us at 469-385-6400.

SOURCE Texas Credit Union League