As we survey the financial landscape after a volatile 2009, we are pleased to report that Members Credit Union fared quite well. In a year in which over 140 banks failed as well as 28 credit unions, Members Credit Union maintained a strong capital to asset ratio of just under 10%, increased assets by 11% and deposits by 13.1%. Despite an extremely trying time for the nation as a whole and the adversity of the past twelve months in the financial industry, Members Credit Union persevered and is as financially healthy now as ever in our 56-year history.
How did we avoid the problems that befell so many other financial institutions? Quite simply by remaining true to our core values of investing wisely and securely. Unlike many other financial institutions, we do not try to hit “home runs” with our investments. We believe in a solid investment strategy that provides a steady return. We do not participate in commercial lending or indirect auto lending. We shy away from 30 year fixed rate mortgages that do not require a down payment or any income verification from the applicant. We pass on risky investments such as commercial real estate mortgage backed securities and Collateralized Debt Obligations. These types of investments, while offering the opportunity for a huge return, also carry tremendous risk. When investments such as these tanked, investors were unexpectedly exposed. Members Credit Union with its solid and thoughtful investment strategy did not suffer the huge losses incurred by those institutions that chose to follow a more dangerous investment strategy.
We are proud to be part of an industry that did not request nor receive any federal bailout money from the Troubled Asset Recovery Program (TARP). The credit union industry, as not-for-profit financial cooperatives, solved its own problems without subsidy from taxpayers or the government. As a good corporate citizen, Members Credit Union paid its fair share to ensure that our corporate credit union system did not fail and that the National Credit Union Share Insurance Fund, the credit union’s deposit insurance fund, had adequate reserves. While these unexpected large expenditures negatively impacted the bottom line of the credit union for 2009, and will possibly do so again in 2010, it was necessary to keep the industry, as a whole, healthy. Much like a bone that breaks and heals even stronger, the credit union industry will, in the long run, be stronger for weathering this storm.
Despite the turmoil in our economy, Members Credit Union had a very respectable year on our balance sheet. Our asset growth, an 11% increase, was outstanding. Although the stock market rebounded somewhat in 2009, deposits still increased a hefty 13.1%, which is unusual because credit union deposits often suffer when the stock market increases. One catalyst for our deposit growth may have been the increase in the share insurance coverage from $100,000 to $250,000, as large depositors felt more comfortable increasing their total account balances in the credit union. Members also flocked to our high yield Money Market and Super Sixty accounts, resulting in increases in these accounts of 36.5% and 50.2% respectively.
Quite understandably our loans outstanding fell slightly during the year as members paid down existing debt and were reluctant to take on additional obligations. Note that our loan decrease cannot be traced to tightened credit standards. We understood the plight of our members and did not make obtaining a loan at the credit union an impossible challenge. We kept our rates very competitive – in fact our auto loan rates remained the same throughout the year – and encouraged members to borrow if they needed a loan.
Our loan delinquency presented quite a challenge as many of our members either lost their jobs or faced reduced work hours. Our Collections Department — now known as the Financial Solutions Department to better reflect its mission of helping members — worked diligently to provide possible solutions to members’ financial problems. We assisted members by easing terms, reducing monthly payments, consolidating loans, and extending payments. By working with us, members were able maintain their credit rating and avoid bankruptcy or a repossessed vehicle.
Fortunately we see signs that unemployment figures have steadied and many of our sponsor companies have slowly begun to rehire laid off workers. We hope these signs of economic recovery will lead to improving loan and delinquency figures in 2010.
In most categories our credit union performed very well. However, the pace of our membership growth was just 2.6% in 2009. Although this exceeded the credit union national average of 2%, our member growth was still disappointing. With so many bank failures in the past twelve months and the extremely negative press that has been heaped upon the huge banking conglomerates, we believe the time to increase membership is now. I have challenged the staff of our credit union to make this a priority in 2010. From the Chairman of our Board to our newest employee we all intend to spread the word of the benefits of credit union membership. The public is clearly disenchanted with the fee structure and impersonal service of large financial institutions and the low cost, high service option of credit unions is more attractive than ever. The time is ripe for credit unions to increase membership and positively impact the financial lives of even more members.
The difficult economy of 2009 did not derail our plans to expand in North Carolina. On July 1, Chatham Employee Credit Association in Elkin was merged into Members Credit Union. This merger brought the credit union nearly 700 new members, over $2.4 million in loans, and deposits of over $4.6 million. In addition, the merger extends membership eligibility to anyone who works, lives, worships, or attends school in the Northwest North Carolina counties of Surry, Wilkes, and Yadkin. With the merger we also opened a branch in Elkin, the twentieth office in our extensive network throughout the state.
Not only have we increased our branch network but we have also increased our presence in the latest electronic phenomenon – social media. Last year our “Ask Jack” blog was created as an easy avenue for members to open a dialogue with the credit union, make suggestions, or ask questions. In 2009 we waded even deeper into the social media pool by creating an MCU Facebook page and Twitter account. By becoming our friend on Facebook or following us on Twitter, members can get up-to-date information about credit union events and projects, be the first to know about special promotions or rates, and become more interactive with the credit union to increase their financial savvy and confidence.
Our first foray into social media was the blog for our What Are You Saving For? Account. This blog and related account taught members the value of saving and was awarded, in our asset category, the Louise Herring Award at the annual credit union meeting in Pinehurst, NC. This award is given to the credit union that best demonstrates the practical application of the “people helping people” philosophy. The What Are You Saving For? Account also earned honorable mention in the national Louise Herring competition.
Realizing that many of our members would once again benefit from the opportunity to skip a loan payment during the holiday season, for a second consecutive year we offered our Holiday Skip-A-Pay program. Unlike other financial institutions that charge a fee, Members Credit Union offered this benefit to our members free of charge because it was the right thing to do, not to make a profit. As a not-for-profit financial cooperative, it is our job to make the financial lives of our members better. With programs such as Holiday Skip-A-Pay we believe we are helping.
We also have no doubt that our scholarship program, which began in 1996, has helped to make our members’
lives better. In 2009 Members Credit Union awarded 23 members scholarships worth $22,000. In total, we have now granted $118,000 in scholarships to over 150 members since the program’s inception.
In addition to providing members scholarships, the credit union participated in many other charitable causes throughout the year. One of our more successful events was a food drive, held in conjunction with the grand opening of our branch in Elkin in July, to support the needs of the Tri-C Christian Ministry. The Tri-C Christian Ministry provides food and household items to needy families in the three county area of Surry, Yadkin, and Wilkes. Due to the overwhelming generosity of the Elkin community, many who were facing difficult economic times themselves, the credit union donated over 1,000 pounds of food and $683.
In addition, the credit union raised over $9,000 in support of the Juvenile Diabetes Research Foundation, again due to the inspiring generosity of our members. Our Newton branch alone raised over $4,000 in 2009 to assist the local Corner Table Soup Kitchen. We also held a toy drive to benefit Brenners Children’s Hospital in Winston-Salem, donated school supplies to the High Point Housing Authority, provided and installed slightly used computers in the Sampson Center in Clinton, NC, gave gifts to the Christmas Bureau in Hickory, and bowled to support Big Brothers and Big Sisters Bowl for Kid’s Sake.
In December 2009 we introduced a new Visa Prepaid Debit Card to our membership as an additional way for members to access their money. Because it is a prepaid, reloadable card no one has to be concerned about insufficient funds or high balance fees. The card only allows you to spend the money you have loaded on the card. This card is a great financial literacy tool to teach high school and college aged students the art of budgeting and staying within spending limits.
In our ongoing effort to encourage our members to save we will introduce a Round Up account in the first quarter of 2010. Members who choose to enroll in this program will have all Visa Debit transactions rounded up to the next whole dollar. The difference will go to a special Round Up Savings account.
Our Supervisory Committee, our State Examiner, and an independent professional auditing firm all performed audits within the last year. All examinations confirmed that our records and operating procedures are sound and our financial standing is strong.
2009 is behind us and we look forward to 2010. We see a challenging year ahead as the economy attempts to rebound and people continue to seek work. The road in 2010 may still be rocky at times, yet we are confident that we can continue to improve the financial lives or our members.
Thank you for your membership and support.