SOURCE: Delta Community Credit Union

October 14, 2008 08:49 ET

Credit Unions Offer Millions of Americans Peace of Mind Today on Eve of 75th Anniversary of Federal Credit Union Act

Delta Community Credit Union Stands Strong With Not-for-Profit Principles and High Level of Capitalization for Existing and New Members

ATLANTA, GA--(Marketwire - October 14, 2008) - Credit unions began in Europe in the mid-1800s as unique depository institutions created not for profit, but to serve members as credit cooperatives. The first credit union in the United States was formed in 1909, providing consumers inexpensive credit at a time when commercial banks and savings institutions were not generally interested in serving this market.(1) In 1940, six years after President Roosevelt signed the Federal Credit Union Act, what is today Delta Community Credit Union, was formed.

"Not a lot of people understand the history of credit unions and the important role they played in providing consumers greater access to fairly priced loans and credit during the early 20th century," explains Rick Foley, president and CEO, Delta Community. "And, it is that founding principle that has generally put credit unions on surer footing during this particular rocky economic time. Because of their not-for-profit status, credit unions do not have the same pressure to generate ever-increasing returns and arguably have the ability to serve the consumer's interest in a less conflicted way. Credit unions are also highly regulated and generally have limits on engaging in risky or speculative market activity."

Consistent Regulation Keeps Credit Unions Strong

In 1970, the National Credit Union Administration (NCUA) became an independent federal agency and the National Credit Union Share Insurance Fund (NCUSIF) was formed to insure members' deposits. Federally insured credit unions, including Delta Community, capitalize the National Credit Union Share Insurance Fund by depositing one percent of their shares into NCUSIF, backed by the "full faith and credit of the United States Government."(2)

"The NCUSIF was formed without using tax dollars and capitalized solely by credit unions," explains Foley who has been with Delta Community for more than 20 years. "During previous financial periods of challenge, credit unions overall have remained healthy and growing, particularly in the 1990s and now into the 21st century. According to current data from the NCUA, there are approximately 8,000 federally insured credit unions serving 88 million members with deposits of $677 billion and loans of $546 billion. We are very proud to be a part of that community."

As Georgia's largest credit union, Delta Community may prove to be one of metro Atlanta's biggest resources for consumer calm. Prior to the market fallout, banks averaged about 10 percent capitalization while credit unions averaged 11.1 percent. In dollars, that was a capital cushion of $90 billion. Delta Community's capital ratio today stands at approximately 15 percent, which puts it in a strong position to serve the depository and loan needs of both existing and new members.

According to the NCUA, "Although current mortgage and credit markets continue to cause fluctuations in the financial sector, the overall fiscal condition of federally insured credit unions remains stable." Based on data published by the NCUA, mortgage production among credit unions rose 10.1 percent during the first half of 2008, illustrating credit unions are filling a significant need in the marketplace.

"The current unrest in the financial marketplace has made consumers uneasy and caused them to be more diligent in choosing a provider," notes Foley. "The way we do business is easy to understand. We make conventional loans to our members and generally hold them until they mature or pay off. We don't invest in high-risk or complicated securities and financial instruments issued by investment banks. We take the interest on our loans and return most of it to members through competitively priced checking, savings and CD accounts and invest the balance in maintaining a prudent capital base. We also post our monthly results in all of our branches for anyone to review.

"Trust is key to any relationship," concludes Foley. "Credit unions have a track record of earning the confidence of the consumer, and we believe we stand out as a compelling alternative for people now more than ever."

About Delta Community

Delta Community Credit Union, one of the largest financial institutions in Georgia, was founded in 1940. Today it serves metro Atlanta, including residents of local counties along with individuals, families and employees of organizations such as Delta Air Lines, Chick-fil-A, Yamaha Motor Manufacturing and Racetrac. As a not-for-profit organization, Delta Community chooses to give back its earnings to its customers and their local communities. It is a state-chartered credit union organized under the Georgia Department of Banking and Finance and federally insured by the National Credit Union Share Insurance Fund.



Credit Unions Stand Strong Today


(1) History of Credit Unions, www.ncua.gov


(2) NCUA History, www.ncua.gov

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