Message From the CEO President/CEO Chuck Garner

THE FINANCIAL MARKETS AND OREGONIANS CREDIT UNION

There has been a great deal of media coverage about the condition of financial markets.  It is very negative and has many worried.  But understand that the financial markets are not caving in and you will not lose your deposits in Oregonians Credit Union, another credit union or even a bank.

Mortgage Related Problems
Fannie Mae and Freddie Mac have been in the news lately.  Most of the public had not even heard of these two until this summer.  They have been existence for many years.  The primary reason for their existence is to expand home ownership, which is a good thing.  But they are so big and concentrated only in one type of loan, mortgages, that the mortgage crisis, caused by lenders making a large number of sub prime mortgages, is having a huge impact on them.

OFCU makes mortgage loans.  We have sold some of our loans to Fannie Mae.  The current crisis will have no effect on any of the loans that we have sold.  In fact, we have retained servicing for all sold loans which means that members make their monthly payments to us.  Nothing will change with this relationship.

We also have purchased bonds as investments.  Many of these bonds are mortgage backed securities issued by Fannie Mae and Freddie Mac.  The bonds that we own are backed by conventional/’traditional’ mortgage loans, not the subprime loans that are to blame for the current crisis.  Because the loans that back these bonds are not high risk we expect that we will continue to receive ‘principal and interest’ just as we have since we first invested in such bonds in the early 1990’s.

Credit Unions and Banks Are Safe
There have been a few bank failures lately and recent news indicates that there are more banks that are on regulators’ watch lists.  There have also been some credit union failures.  But no depositors in either of banks or credit unions have lost their deposits.  This is due to the Government-backed deposit insurance programs.  For banks it is the FDIC and for credit unions it is the NCUSIF.  These insurance funds are solid and will continue to protect depositors.  Look below for more details about the NCUSIF and the coverage you have for your OFCU accounts.

OFCU’s Safety?
The key indicators of safety are the net worth ratio and delinquent loan ratio.

Credit unions overall are quite sound.  At the end of the first quarter 2008, the industry had net worth exceeding 11% of total assets.  The industry average is high but OFCU’s net worth exceeds 13.5% of assets.  That is very high.

Credit union delinquency has increased somewhat over the last two years, but it remains relatively low at about .91% while loans losses are running less than .7%; this means that total delinquent loans and loan charge offs were about 1.6% of all loans outstanding at the end of the first quarter.  OFCU’s ratios remain below the industry average at .32% delinquency and .1% charge offs, again better than the credit union average rates.

Understand that OFCU, as most other credit unions, did not make sub prime mortgage loans.  We have made a small number of adjustable rate loans and first time home buyer loans, but we have not seen delinquency problems with these loans and do not expect this to change.

OFCU also has been much more conservative in other loans that we have made.  While many lenders, including many Oregon credit unions have been making very risky auto, boat and RV loans—risky due to lending large amounts over traditional values and terms much longer than considered prudent, we have not.  So as the economy slows, we not expect to see great increases in losses for these loans.

So is OFCU safe and sound?  We have above average net worth, below average loan delinquency and charge offs, we do not have sub prime loans on our books and we do not hold ‘sub prime’ securities.  We are considered safe and sound.  In addition, our accounts are backed by deposit insurance from the National Credit Union Share Insurance Fund (NCUSIF) which is managed by the National Credit Union Administration (NCUA).

How Much Share Insurance Do You Have At OFCU?
Deposit accounts held with Oregonians Credit Union are federally insured by the National Credit Union Share Insurance Fund (NCUSIF), an arm of the National Credit Union Administration (NCUA), an independent agency of the United States Government.

Share Account Coverage
Accounts are insured to at least $100,000 based on registration of ownership. If an OFCU member has more than one individual account, those accounts are added together and are insured to at least $100,000. Accounts maintained in different legal ownership registration may be insured separately. There are numerous combinations of account registrations that can increase your total coverage. For example:

* Each account holder’s interest in all joint accounts are added together and insured to at least the $100,000 maximum. This means that the maximum insurance coverage could be greater than $100,000 for that account. In the case of a joint account owned by two persons, for example, the coverage doubles to $200,000 ($100,000 for the interest of each owner assuming either owner does not own other joint accounts).

Visit www.ncua.gov/ShareInsurance/index.htm for complete details

Have any concerns about OFCU?
We want all members to have faith in his/her credit union.  If you have any questions or concerns call or email.  Call our main line at 503.239.5336 or 800.982.2974 and ask for Chuck Garner and tell our staff that you have questions about OFCU.  If I am not available please leave a message and a call back number.    You may also email me at chuckg@ofcu.com.