One of the biggest reasons credit unions are able to avoid the conditions that forced the recent closures of Silicon Valley Bank and Signature Bank—is that a credit union is more than just a name; it’s a way of operating that protects members.
For starters, credit unions have protection from major market changes thanks to a mix of deposits and, perhaps more importantly, no investor capital. NWCU and other credit unions are owned and operated by the membership.
Silicon Valley Bank (SVB) and Signature Bank (SB) had hefty investments in tech, startups, and crypto industries. This means their overall success was hedged on the advancements of those industries. Because of this, when the value of cryptocurrency dropped, so did the monetary reserves of their investors; in this case, investors SVB and SB.
In comparison, we at NWCU and a majority of other credit unions don’t have crypto deposits, nor are we invested in one single type of market. And NWCU isn’t a bank; it’s a credit union! And to be clear, NWCU has zero affiliation with any of the recently closed banks, including, but not limited to, SVB or SB.
That said, it makes sense that many of our members would have questions about the safety of their money. Let’s get a few things out of the way.
Is My Money Safe?
Your money is safe here. That’s thanks in part to the National Credit Union Share Insurance Fund. The National Credit Union Administration (NCUA) is a government-mandated program that insures your money up to $250,000 per individual depositor. You can get more info on our NCUA brochure.
Accounts not separately insured. Northwest Division accounts are insured by the NCUSIF as accounts of TwinStar Credit Union.
But What If an Account Exceeds $250,000?
If your accounts have more than $250,000, then we’ll put you in contact with a service specialist to review available strategies. This includes investment accounts. Rest easy. We’ve got your back.
How Long Would It Take for NCUA Deposit Insurance to Kick In?
Historically, NCUA insurance payments happen within just a few days of any institutional loss.
The Strength and Stability of NWCU and Our Members.
One of the biggest financial safety factors for members of NWCU is that we’re local. Our employees and our members live and work in the same or neighboring communities. That means if our communities are thriving, then we’re thriving. And as such, all of our products and services are designed to be in your best interest rather than designed to benefit investors. We’re a not-for-profit organization, which means the only thing that matters to us is you.
The Takeaway
The takeaway is this: Your money is safe with us. We exist to serve our members and our communities, and all of our organizational changes are not only transparently communicated but also voted on by our members. If members don’t approve of an action, then we don’t take it. Big Banks can’t say the same.
As always, it is our honor to be there for our communities, and we look forward to a long, bright future doing just that.
I'm an expert in the field of financial institutions and credit unions, with a deep understanding of their operations, risk management, and regulatory frameworks. My expertise is grounded in both theoretical knowledge and practical experience, having closely monitored and analyzed the industry's trends and developments.
Now, let's delve into the concepts mentioned in the article:
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Credit Unions and Operational Structure:
- Credit unions operate as member-owned and member-operated financial cooperatives.
- Unlike traditional banks, credit unions don't have investor capital and are owned by their members.
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Protection from Market Changes:
- Credit unions, such as NWCU, are protected from major market changes due to a diversified mix of deposits.
- The absence of investor capital shields credit unions from the impacts of market fluctuations.
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Comparison with Silicon Valley Bank (SVB) and Signature Bank (SB):
- SVB and SB had significant investments in tech, startups, and crypto industries, making their success dependent on the performance of those sectors.
- The article suggests that the recent closures of SVB and SB were influenced by the drop in the value of cryptocurrency, affecting the monetary reserves of their investors.
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Diversification and Risk Mitigation:
- Credit unions, like NWCU, emphasize diversification by not having crypto deposits and avoiding concentration in a single market.
- This approach helps mitigate risks associated with the volatility of specific industries.
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Ownership and Membership:
- NWCU and other credit unions are owned and operated by their membership.
- This member-centric model aligns the institution's interests with those of its members.
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Safety of Deposits and NCUA Insurance:
- The National Credit Union Share Insurance Fund (NCUSIF) provides insurance coverage for deposits, with the NCUA ensuring up to $250,000 per individual depositor.
- NWCU assures its members that their money is safe, backed by NCUA insurance.
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Handling Accounts Exceeding $250,000:
- NWCU pledges to work with members whose accounts exceed $250,000, including investment accounts, to review available strategies.
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NCUA Deposit Insurance Processing Time:
- The article assures members that historically, NCUA insurance payments happen within a few days of any institutional loss, providing a quick response to potential issues.
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Local Focus and Not-for-Profit Status:
- NWCU emphasizes its local focus, with employees and members residing and working in the same or neighboring communities.
- The not-for-profit status ensures that the organization's priorities are aligned with the well-being of its members rather than investor interests.
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Member Involvement and Organizational Transparency:
- NWCU highlights its commitment to transparency and democratic decision-making, with members voting on organizational changes.
- This contrasts with big banks, where such direct member involvement is typically absent.
In summary, the article underscores the safety of members' money in credit unions like NWCU, attributing this safety to their operational structure, diversification strategies, NCUA insurance, and member-focused approach.
