2nd Quarter 2018 Message

July 1, 2018
Dear Members:
As we’ve been hearing in the news lately, the U.S. economy is booming: Unemployment is at the lowest level of the century, job creation continues, small business optimism is at record levels, and wages are rising. But along with the economic successes comes the need to mitigate the negative effect of a growing economy, namely inflation. The Federal Reserve Board has a strategy for this and has put it into action in recent months by gradually increasing the interest rate they charge banks to borrow from them. This translates into increases in The Wall Street Journal’s published prime rate, which is of specific interest to us as borrowers. The Wall Street Journal prime rate is the underlying index for the interest rate UCU applies to home equity lines and Kwik Cash lines of credit. Currently at 5.00%, the Fed has indicated it may raise rates another 0.25% to 0.50% this year.
Even with these increases in interest rates, our loan portfolio continues to grow monthly as a reflection of that economic optimism.  In fact, this past quarter appears to be one of the highest on record for new loans to members. I believe it’s because we offer such competitive rates, with collateral loan rates starting at 2.00% APR, combined with payroll deduction to make everything easy.
Along with increases in loan volume comes more income to your credit union. That income is passed on to you, the members, in the form of higher quarterly dividends. We increased the dividend paid for the first quarter 2018 from that which was prospected the previous quarter.  We also increased the rates we paid for the 2nd quarter of 2018 and expect to continue to pass along those increases for the 3rd quarter.
Regarding our recent decision to discontinue sponsorship of our credit card program and transfer direct control to our current provider institution, those discussions continue. By disassociating ourselves from the financial liability of the many forms of credit card fraud, the Board feels all members are being better protected. As a small credit union, UCU does not have the resources to continue to operate in that arena. However, we are optimistic UCU card holders will continue to receive the good service and reasonable rates with the new cards that we’ve been accustomed to in the past.  We anticipate the transition will be complete by the end of the year.
I hope all were able to enjoy the recent 4th of July holiday with friends and family and will continue to have a safe and fun summer.
John R. Ness,
Chairman, Board of Directors


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