A message to our members
Banking Safety 101
Recent bank failures illustrate that business models and risk management matter. They are central to keeping people’s trust and a solid overall banking system. Let’s look at key considerations of the Finex business model and risk management to show how we differ from risky banks.
#1. NO CREDIT UNION DEPOSITOR HAS EVER LOST A PENNY IN INSURED DEPOSITS! As a cooperative, we have a regulator and insurer (NCUA) who manages the credit union risk insurance fund conservatively and effectively. Finex has strong capital, asset quality, and liquidity ratings from the many state and federal regulators who oversee us.
#2. OUR DEPOSIT BASE is the retail deposits of our membership which do not include risky commercial deposits. Over 95% of Finex deposits are under the $250,000 federal insurance limit with over 70% of those funds in savings and checking accounts.
#3. PANDEMIC INFLUX OF DEPOSITS was kept predominantly in cash, short-term investments, and in small-dollar member loans. We assumed that members would slowly spend and withdraw stimulus money; therefore, we did not invest in long-term CDs or Treasuries as many other financial organizations did. They now face unrealized investment losses due to rate increases.
#4. CONTINGENCY LIQUIDITY PLANS are important to protect against unforeseen events. Finex had three in place for years before the current pressures materialized. First, we have a standard line of credit (LOC) with our central bank (Corporate is the term credit unions use). Second, we have a LOC with Federal Home Loan Bank (FHLB) that is secured against real estate loans held. Third, we purchased stock in the Central Liquidity Fund, a federal government-backed emergency liquidity agent, that provides Finex with a LOC should a banking crisis occur.
#5. OUR RELATIONSHIP WITH YOU is central to how we run the credit union. Keeping your trust through great service and building relationships is more important to us than explosive growth or taking risky bets with your money.
The Board of Directors and I want all members to know that your money is safe with Finex and that we have been proactive in keeping basic banking principles top of mind since 1938. By sharing these fundamental facts, we hope it provides a helpful perspective to know that we are one of the safest places to keep your money. You can also rest assured that our laser focus on serving you will help keep it so.
Michael Palladino
President & CEO, Finex Credit Union
