AUSTIN, Texas – At least one credit union is opting for private deposit insurance to help it escape from the growing costs of the corporate credit union bailout.
In ballots distributed to its members, Velocity CU says it is converting to private insurance, at least in part because of the charges assessed by NCUA to all federally insured credit unions. For the $500 million credit union that charge was $675,106 for this year, members were told. Financial reports submitted to NCUA indicate an even higher cost of $3.4 million, turning a $3.6 million net for the first three quarters of the year into a narrow $240,000 net.
"This additional cost for federal deposit insurance adversely affects the credit union’s earnings and net capital in 2009," members were told.
The credit union plans to obtain deposit insurance from ASI of Dublin, Ohio, the last survivor of what was once a network of more than two dozen private deposit insurers for credit unions.
Officials with the credit union have not returned phone calls seeking comment.
Velocity is one of several credit unions in the process of converting to private insurance. Only state chartered credit unions can opt for private insurance as all federal charters are required to be federally insured.
