Recession and Beyond
How did the recession of 2008 & 2009 affect Piedmont Credit Union? This is a question that we still get from time to time. Fortunately, Piedmont Credit Union did not suffer like the banking industry. The credit union does not invest money in anything riskier than a certificate of deposit. All deposits are in federally insured accounts under the maximum insurable amount or in government bonds. Stocks and sub-prime securities are simply not an option for most credit unions because it is the mandate of a credit union to be prudent with its members' money and not to take risks with it. That said, the credit union is not immune to the effects of the sluggish economy even though it has by and large made all the right decisions regarding investments.

* Whatever affects you, affects your credit union. Even though there are positive signs emerging about the national economy, many of our members are still feeling the effects of the recession. Eighty percent (80%) of the credit union's total income is from interest collected on loans. Loans, as they are repaid, make the credit union grow. So if fewer of our members are borrowing today, that represents a future reduction in income.
* Past due loans and charge offs. If our members are going through a job loss, layoff, or other crisis that hinders their ability to pay their credit union obligations, that represents a current loss to the credit union. Simply put, nothing hurts the credit union more than when our members are unable to pay their loans.
* Corporate credit unions. Corporate credit unions only serve other credit unions, not individuals. There are two very large corporate credit unions which have suffered during the recession because their income is primarily from investments. If you have looked at your 401K or other retirement plan over the past two years you have no doubt seen the effect that the recession had on investments. To help stabilize the corporate credit unions, the almost 8,000 natural person credit unions across the country have essentially provided the funds to "bail out" the corporate credit union financial system. Piedmont Credit Union was required to participate in proportion to our size.

What does the future hold? Keep in mind that your credit union will only be as successful as you, our members, are. If you need a loan, please consider your Piedmont Credit Union first. If you've lost your job or had a significant reduction in income please come and talk it over with us. The credit union may be able to reduce the amount of your payments to fit your new income level.

Right now the future looks very positive! Piedmont Credit Union has made all the right decisions concerning its investments. Overall, the last two quarters of 2009 showed great improvement over the previous two. As a result we're in a position to come out of the recession very strong. In 2009 we celebrated our 40th year of serving our members. Looking ahead, 2010 will be a great start to the next 40 years of serving our members!


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