Southside Credit Union

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By now all of you are aware that the banking system in the United States is in distress. These are extraordinary times in banking and unfortunately some of this has also filtered down to a few of the largest Federal Corporate credit unions. All credit unions are insured by the NCUA, a government backed agency. No depositor has ever lost funds under protection of the NCUA. Recently, the NCUA announced that they had placed two of these huge Corporate credit unions into receivership. One in California and the other in Kansas had invested in over $58 billion in Triple A mortgage bonds (Southside Credit Union does not invest in these types of bonds or loans) which became undervalued due to the mortgage crisis. The resulting loss was over $5.6 billion. The NCUA had sufficient funds and stepped in to cover these losses with capital from the insurance fund. This insurance fund is created by the deposit of fees paid by every credit union each year for this insurance. The Southside Credit Union does not have a deposit relationship with either of these Corporate credit unions. The net result, however, left the insurance fund below the minimum required by regulation. To replace these funds the NCUA is assessing all Federally Insured credit unions (under the Letter to Credit Unions No. 09-CU-02 dated January 2009) an additional fee of 1.37% based on the credit unions reported insured deposits as of 12/31/08. The Southside Credit Union assessment for the impairment will be $199,385. An additional fee of $86,689 will cover the increased insurance coverage (to $250,000 per account) approved by Congress recently. The total extra charge to our credit union will be $ 286,074. Since Southside Credit Union was formed in 1996 it has been placing regular reserves and undivided earnings into an equity account for safety. This currently amounts to $2,538,620.77; net income increases this amount each month. This will reduce the account by 11.3% to $2,252,546.77. As unfortunate as this is, and at no fault of our credit union, it is the responsibility of every Federally insured credit union in the United States to assist in the recovery of this very important NCUA fund so that all depositors accounts in the U.S. continued to be insured. Let there be no question that your accounts remain insured and that this credit union continues to operate as it always has; in a safe and sound manner to the best of our abilities. Servicing our membership is of greatest importance to us and we will continue to provide the services you require. Also, contrary to what the news media says we have ample funds to lend and rates are the lowest they have been in over 10 years. Please contact us if you have a worthwhile need. If you have any questions concerning this matter please feel free to call me personally at 932-1010. Sincerely, Ken E. Baker C.E.O.

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