ACU...SMOOTH ROADS AND STRONG BRIDGES

President Obama is looking to the nation’s infrastructure as a potential means of job creation –
renovating our nation’s roads and bridges.

The federal bailout is concerned with shoring up the infrastructure of the nation’s financial industry. In this case, infrastructure refers not to public structures like roads and bridges, but to a financial institution’s loan and investment portfolios.

Excessive losses, and even mergers and FDIC takeovers, arose from the faulty infrastructure of some financial institutions. Even when published data may have shown strong capitalization, their portfolios contained high-risk real estate loans combined with investments in mortgage-backed securities and collateralized mortgage obligations which carry, among other risks, excessive prepayment, sub-prime and interest rate risks.

In previous communications, we have stated all through this crisis that ACU is one of the highest
capitalized financial institutions in the nation, with low loan delinquencies and charge-offs.

But what about ACU’s infrastructure – its loan and investment portfolios?

All $77 million of ACU’s loan portfolio is categorized as minimal risk. Even so, it is backed by over $700,000 set aside for loan losses. Supporting this is approximately $23 million in equity contributing to ACU’s high capital ratio exceeding 16%.

Our loans are low-risk for several reasons: (1) 99% are originated at the Credit Union where they must pass the scrutiny of qualified staff, a Board-appointed credit committee, and our state and federal regulators; (2) we do not lend to the general public; and (3) we do not hold any sub-prime or otherwise risky real estate loans. Our delinquincy ratio and net charge-off ratios are below the national average of other CUs.

ACU has an ultra-conservative investment policy. Of approximately $54 million currently invested, over 97% is insured by the federal government.

In summary, your deposits are safe and secure because of ACU’s high capital position, money set aside for loan losses, its infrastructure (solid loan and investment portfolios), and deposit insurance (up to $250,000 on your deposits plus an additional $250,000 on your IRA accounts) through the National Credit Union Administration (NCUA), an agency of the federal government.

Your credit union’s infrastructure? Its roads are smooth, bridges strong.

Sincerely,

Joe Wasaff
President and CEO