Mennonite Financial is Strong & Healthy
Many of you are troubled by the current financial turmoil in our country—and rightly so. As a result, I have been receiving questions from members about our credit union and how we are being affected by what’s happening. Here are some of these questions and my answers.
Q: Is Mennonite Financial federally insured?
A: Yes. All accounts in your credit union are backed by the full faith and credit of the U.S. government. Until the recent action by Congress, this insurance has been $100,000 per depositor for regular savings account. That amount has now been increased to $250,000.
Q: How does the stock market decline affect Mennonite Financial?
A: It does not affect us directly. By regulation credit unions are not permitted to own stocks.
Q: How do the subprime lending problems affect Mennonite Financial?
A: We do not own or invest in mortgage-backed securities or originate sub-prime loans. (Subprimes are mortgages with weakness in borrower credit scores, capacity to make payments, or borrowing with no down payments—loans that were based on two flawed assumptions: that home prices will not go down and that interest rates will remain low.) At Mennonite Financial, we make credit decisions on mortgage loans by evaluating the borrower’s character (credit score), capacity to repay the loan, and the collateral for the loan. We do not shortcut the underwriting process just to grant a loan—which is what happened in the subprime market.
Q: Is my money safe at Mennonite Financial?
A: Yes. We believe that loan quality is fundamental to a solid credit union. I am pleased to report that our members continue to repay their loans in spite of a challenging economy. With only 0.08% of our loans resulting in a loss, that means that 99.92% of all our loans are paid in full. By comparison, the average loss ratio for peer credit unions our size is .44%—fully five times higher than at Mennonite Financial.
Q: Does Mennonite Financial have reserves?
A: Yes. In addition to the federal deposit insurance on our accounts—now up to $250,000 per depositor—we have equity reserves equal to $1 for every $9 on deposit.
While other financial institutions are being severely tested, Mennonite Financial continues to reflect solid earnings and overall core financial strength. Our financials, which we publish every month, are available in our offices. Or you can view our quarterly financial report to the National Credit Union Administration at www.NCUA.gov. Our credit union ID number is 10223.
To learn more about the safety and soundness of the National Credit Union Administration Insurance Fund, visit http://webapps.ncua.gov/ins/.
If you have questions or need more information about the soundness of Mennonite Financial, don’t hesitate to contact me at 800-451-5719, ext. 171, or at kent@mennonitefinancial.com.
W. Kent Hartzler
President & CEO