The Great Recession!  That is what economists and the media have dubbed the last two and a half years.  Most of us have been told stories by our parents or grandparents about the Great Depression of the 1930s; now we have stories to tell our grandchildren!

What kept us from falling into a “depression” like the 1930s?  Well basically it was the regulatory structure that was put into place to prevent another crisis.  Yet you ask “if it worked then why did we experience a financial crisis that is only rivaled by the Great Depression”?  While we still have high unemployment (just under 10%) it didn’t reach the level of the depression (mid 20%) and even though foreclosures are at record highs so is home ownership (much higher than the 1930s).  Yes bankruptcy filings jumped in 2009 by more than 50% (over 2008) but they were at the same level as 2005 filings and we weren’t in a “crisis” in 2005.  The record low interest rates had a lot to do with controlling the downward spiral but even those are a double edged sword.

I can hear you screaming “enough already, you are making my hair hurt”!  Fair enough; let’s focus on Personal Care America Federal Credit Union and where your credit union stands in all this mess.  WE STAND TALL!  A quick look at our net income might cause you to drop your coffee or choke on your bagel but you need to look deeper to understand the real numbers.  During 2009 two extraordinary events outside the control of the credit union occurred which required us to take expense charges totaling over $157,500.  When those charges are removed, the credit union actually exceeded our budgeted income target of $16,000.  “Will these events reoccur” you ask?  The most costly, nearly $135,000 will not, however we were assessed a “special charge” by the NCUA (our regulator/insurer) of about $22,000 and have been told by them to expect an even larger assessment for 2010.  The credit union has budgeted for this and has made cuts to other expenses allowing us to forecast positive net income for 2010.  Our target is in line with past years’ performances.

How have we done this?  We have worked at controlling growth.  The Board of Directors along with management felt the best strategy was to “pull in our wings” as we ride out the turmoil.  While we have focused on controlling growth, we have not changed our loan underwriting standards and are very much in a lending mood!  Our standards, while somewhat conservative, have served us well; the results are demonstrated by the fact that both delinquencies and loan losses, while higher than previous years, are about half the national average for credit unions.  When you compare us to banks we are almost five times better!

So what is our game plan?  Trim our sails, steady at the wheel and stay the course.  Personal Care America Federal Credit Union is well capitalized (over 9%) and well positioned to ride out the storm.  Your commitment to us and ours to you has put the credit union in this enviable position.  Thank you!

More than ever before you have shown and we believe Personal Care America Federal Credit Union is

Where you belong!

John E. Keet Jr.

President/CEO