The current headlines regarding the financial services industry can be overwhelming, and certainly cause concern for everyone. Sub-prime mortgages. Record foreclosures. Huge loan losses. High-risk investment losses. No cash available for credit. Bank failures. Government bail-out programs.
It’s important to understand the prominence of these topics in the media – and the problems they are reporting – are primarily related to the for-profit financial services sector and not Credit Unions. We realize that members might wonder what this means to them and their Credit Union.
Sound Lending Practices
Many of the problems that financial institutions are facing today are due to their lending practices of the past, including ‘sub-prime’ mortgages. SF Fire Credit Union never entered into the sub-prime market, meaning your deposits have never funded high-risk loans.
Limited Loan Losses & Delinquencies
Sound underwriting practices, a financially stable field-of-membership, and a geographic concentration of membership in (primarily) San Francisco, San Mateo and Marin Counties have all played a part in SF Fire Credit Union having one of the lowest delinquency and loan loss rates in the nation. Our losses have been very limited, and we see no changes to this on our horizon.
Ample Capital Reserves
Given the state of the economy, the Credit Union does expect to incur some limited losses. Rest assured that SF Fire Credit Union is well capitalized with over 10% of our total assets – representing over $50 million – in reserves. Your Credit Union is in a very strong position to weather the current economic downturn.
Good Liquidity to Meet Your Borrowing Needs
SF Fire Credit Union has no liquidity problems and is in the position to make loans, unlike the banks and investment firms that have been in the media, who have been forced to restrict or stop lending. We are ready and able to assist you with your borrowing needs, whether you’re looking to purchase or refinance a home or buy a vehicle.
Conservative Investment Strategy
Credit unions make primary use of member deposits by funding loans (80% of your deposits are lent out to fellow members) and having adequate cash-on-hand to meet member needs. What remains is invested, with the intention of earning money on the funds not in use. SF Fire Credit Union’s investment dollars are not held in the stock market or the mortgage-backed securities that have received much attention in the media, and our portfolio has incurred no losses. Our investment strategy has always been – and will continue to be – that of “safety first and yield last” with investments held in low risk investment securities and term certificates.
SF Fire Credit Union is pleased to hold a strong financial position, and is confident in assuring members that we’ll get through this turbulent economic cycle. Our proud history – which dates back to a modest office at 17 Engine in 1951 – will continue on with a prosperous future for the Credit Union and its members.
To learn about SF Fire Credit Union’s deposit insurance click here.