STCU accounts are safe, insured

Wall Street crisis raises questions about financial strength, insured savings

[October 18, 2008]

Not one penny of insured savings has ever been lost by a member of any federally insured credit union. Yet, with the failure of some large, established financial firms in 2008, many members have asked about STCU and the safety of their accounts.

Q: How is STCU doing financially?
A: STCU is financially strong with more than $1 billion in assets and strong capital reserves of 10.68% as of September 30, 2008. View our third quarter financials.

Our loan portfolio is performing well based on the strong credit quality of our members and our underwriting policies. Our delinquent loan ratio is well below the national averages. We have liquidity policies in place to ensure we can meet our members’ financial needs. Finally, our profitability reflects our stewardship to our members to operate a safe and sound credit union.

Membership means prudence.

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Q. Is my savings safe at STCU?
A. Yes. Your STCU accounts are backed by the full faith and credit of the U.S. Treasury. STCU deposits are insured by the National Credit Union Share Insurance Fund, which is managed by the National Credit Union Administration and backed by the federal government. The amount insured recently increased. Learn more.

Q: Does the takeover of Freddie Mac and Fannie Mae affect members’ home mortgages obtained at STCU?
A: No. At STCU, we generally hold and service home loans we make to our members. In the past, we have sold a portion of our mortgage portfolio to outside agencies as part of our capital and risk management plan. However, we retain servicing on all mortgages we originate with our members. You should see no change in mortgage payments, escrow, tax payments, etc., because of the changes at Fannie Mae and Freddie Mac.

Q: Do the problems at AIG affect our members who have VALIC accounts?
A: VALIC investment products are not federally insured by the National Credit Union Share Insurance Fund nor guaranteed by Spokane Teachers Credit Union, and they may lose value. Brokerage services and products are provided by VALIC, a registered broker/dealer and member of FINRA/SIPC, and are not the obligation of STCU. VALIC is not affiliated with STCU.

Q: Do the recent events at Freddie Mac, Fannie Mae, or AIG affect the performance of STCU’s investment portfolio?
A: While all investments are subject to changes in market values, STCU’s investment portfolio is conservative and we have not experienced significant market losses on our portfolio. We do not have investments backed by subprime loans, nor do we have preferred stock in Freddie Mac or Fannie Mae, or securities issued or guaranteed by VALIC, formerly AIG Retirement.

Q. What about subprime mortgages?
A. STCU avoids them, so subprime mortgages have not been a problem for us.

Q. How much savings can be insured at STCU?
A: More than you may think. Here are some examples of how NCUA insurance coverage works for you:

Each STCU share account is federally insured to $250,000 by the NCUA.
Traditional and Roth IRAs and KEOGH retirement accounts are insured up to $250,000 by the NCUA.
If you have more than one single-ownership account in the same credit union, all those account balances are added together and insured in the aggregate, to the maximum of $250,000.
If you have a joint account at STCU, that account is insured separately from your individual account up to the $250,000 level, provided each of you has personally signed an account signature card and each of you has a right of withdrawal on the same basis. Each individual's interests in all jointly held accounts are added together and insured up to $250,000.
If you have accounts at more than one insured credit union, you have coverage up to the full insurable amount in each credit union. If your credit union has one or more branches, the main office and all branch locations are considered as one credit union.
If you have a revocable trust account, such as payable-on-death, living trust, or testamentary account, insurance coverage for each account is up to $250,000 per owner for each named beneficiary.
You can insure more than $1 million in deposits at STCU by carefully following the insurance limits of the NCUA insurance.

Learn more about STCU. Read the 2007 annual report.

Resources

Links to external websites

Quick Facts

Four reasons why STCU is safer:

Our capital comes from member deposits. We don't have outside investors and do not need outside capitalization.
Credit union deposits are primarily used to make low-risk loans to members. We don't issue high-risk home loans that put member funds at risk.
We are locally owned and overseen by an elected board of directors.
We are not-for-profit, so we don't take big risks to satisfy stockholders. Rather, our earnings are returned to members through better rates, lower fees, and outstanding service.