Editor’s note: After Santa Clara-based Silicon Valley Bank closed March 10, Capitola-based Bay Federal Credit Union posted this FAQ. At the end of the FAQ are letters posted by local bank and credit union CEOs to the community.
What happened with the Silicon Valley Bank closure?
Silicon Valley Bank collapsed after a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.
California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation.
The FDIC will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
Could something like this happen to Bay Federal Credit Union?
Bay Federal Credit Union has a diversified membership base that represents the communities that we serve.
As a result, we do not concentrate risk in one area that could adversely affect the deposits of the Credit Union.
We are financially sound and at very low risk.
What assurances do I have about Bay Federal’s ability to stay in business?
As a member-owned cooperative, Bay Federal Credit Union has a responsibility to its membership to operate in a financially-sound manner. The Credit Union is considered well-capitalized by as defined by our regulator and insurer, the National Credit Union Administration.
Bay Federal’s balance sheet is well-diversified with approximately 65% of its assets in loans to members such as auto and home loans, along with personal loans.
Approximately 30% of its assets are in cash and investments. The investment portfolio is considered very safe and structured to provide ongoing cash flow for operations.
Finally, the Credit Union has posted strong returns for many years. Our Annual Reports are posted on our website and include our financial position at the time of each report.
What happens to my money if something happens to Bay Federal Credit Union?
The National Credit Union Administration, or NCUA, is an independent agency of the United States Government that regulates and supervises federal credit unions.
The NCUA also operates the National Credit Union Share Insurance Fund, which insures the accounts of federal credit unions, like Bay Federal.
The NCUSIF protects members from loss should their credit union fail. You’ll be pleased to know that no member has lost money from accounts insured by the NCUSIF!
What do I have to do to ensure I am covered by NCUSIF?
Deposits at Bay Federal Credit Union are automatically covered by National Credit Union Share Insurance Fund protection.
Federally insured credit unions offer a safe place for you to save your money, with deposits insured up to at least $250,000 per individual depositor.
I have multiple accounts with Bay Federal. How do I know if those accounts are all covered?
The National Credit Union Administration’s Share Insurance Estimator lets consumers, credit unions, and their members know how its share insurance rules apply to member share accounts, including what’s insured and what portion (if any) exceeds coverage limits.
When using this tool, you will want Bay Federal’s insurance number, which is 12067.
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The Share Insurance Estimator calculates, and reports, share insurance coverage for Personal Account and Business Accounts.
Personal accounts include shares held by credit union members in single accounts, joint accounts, revocable trust accounts including both Payable on Death/In Trust For accounts and living trust accounts, and Individual Retirement Accounts.
Business Accounts are shares held by credit union members that are corporations, partnerships, and organizations, both for-profit and not-for-profit.
If you need assistance using and understanding the calculator, we would be happy to help you assess your coverage and specific needs, including account structure and beneficiaries.
Visit any of our branches or call our Member Service Center at 831.479.6000 or toll-free at 888.4BAYFED, option 3.
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Letter from Bay Federal Credit Union President & CEO Carrie L. Birkhofer
By now, you have probably heard the recent news regarding the sudden closure of Silicon Valley Bank. We are committed to helping our valued member-owners, like you, feel secure and supported in your banking relationship with Bay Federal Credit Union.
Bay Federal Credit Union is a community-based, member-owned financial institution with a mission of lending out the deposits from the membership back to the membership. You may rest assured Bay Federal Credit Union is considered financially sound and well-capitalized. The Credit Union’s balance sheet is primarily comprised of member auto loans and member real estate loans. Our investment portfolio is considered very safe by industry standards. All member accounts are insured up to $250,000 by the National Credit Union Share Insurance Fund.
Bay Federal Credit Union is committed to serving our members today and well into the future. We sincerely appreciate the trust you have placed in us and thank you for your dedication to your credit union! If you have any questions at all, please reach out by visiting one of our branches or by calling our Member Service Center at 831.479.6000 or 888.4BAYFED, option 3.
Letter from Santa Cruz County Bank President and CEO Krista Snelling
We want to take a moment to reinforce the safety and soundness of Santa Cruz County Bank in light of recent industry events, particularly the failure of Silicon Valley Bank.
SVB’s failure was primarily due to their heavy concentration in banking high-tech, venture-based companies, combined with significant unrealized losses in their securities portfolio caused by rapidly rising interest rates.
Our business model is fundamentally different.
Our client base is diverse and stable. We do not have any significant industry concentrations nor concentrations with individual clients.
Our capital position significantly exceeds the regulatory levels for being considered “well-capitalized” and any changes to our securities portfolio would not have a material impact on our capital.
Our liquidity position is very strong and includes $320 million in liquid marketable securities and $461 million in unused borrowing capacity at the Federal Home Loan Bank, Federal Reserve Bank and other correspondent banks.
Santa Cruz County Bank’s historical financial performance ratings and earnings releases are publicly available through our website: Investor Relations.
As a community bank, we take pride in our relationship-based business model focused on building long-term trust with our clients.
We look forward to continuing to serve our community through our traditional
community banking model as we have for the past 19 years.
We are grateful for your business and support.
Letter from Santa Cruz Community Credit Union CEO Beth Carr
During the many difficult times we’ve experienced in the past few years, it is even more troubling to hear about the sudden closure of Silicon Valley Bank. This is undoubtedly concerning to you, our member-owners, so I wanted to take a few minutes to reinforce our commitment to providing you with a safe and secure financial relationship at Santa Cruz Community Credit Union.
As a community-based, member-owned, and community-development certified financial cooperative, we pride ourselves in the unique service we offer you and follow the credit union model that ensures we lend member deposits back to our members.
That said, our balance sheet is local and primarily comprised of auto, small business, and member real estate loans.
Furthermore, our investment portfolio is conservative and considered very safe by industry standards. All our member accounts are insured up to $250,000 by the National Credit Union Insurance Fund, which is administered by the National Credit Union Administration.
As a result, you can feel confident that Santa Cruz Community Credit Union is financially sound and well-capitalized.
As we move into 2023 and beyond, we will continue to serve the unique needs of our members by providing competitive rates on loans and deposits. We know you have a choice for financial services, and we are grateful that you are banking with your locally-owned credit union. It is our privilege to help you achieve your financial goals.
If you have additional questions or concerns, please call 831-425-7708 or stop by one of our branches. Any one of our management team or staff is ready to assist you. Thank you again for your continued support of Santa Credit Community Credit Union.