Credit Union 1 happy with private insurance

Credit Union 1 happy with private insurance

RANTOUL – With $516 million in assets, Credit Union 1 is easily the largest credit union based in East Central Illinois. It's also the only one whose deposits are insured by a private company, rather than by the National Credit Union Administration, the federal agency that insures many credit unions.

But Paul Simons, president and chief executive officer of the Rantoul-based credit union, said there's been no clamor from members to switch to NCUA coverage.

"Right now, I'm exceptionally glad we're privately secured," Simons said last week. "I don't want any part of the federal mess going on right now."

Credit Union 1's deposits are insured by American Share Insurance, a Dublin, Ohio-based cooperative of 162 credit unions, Simons said. The cooperative has $1.49 in reserves for every $100 it insures, which, according to American Share's Web site, is greater than reserves reported by federal deposit insurance funds.

"ASI has a much better capital equity ratio than either the NCUA or the FDIC (Federal Deposit Insurance Corp.) at this point," said Simons, who also happens to be vice chairman of American Share's board of directors.

When Credit Union 1 switched to American Share Insurance about 18 years ago, the biggest reason was that American Share offered $250,000 worth of coverage for each account, as opposed to the standard federal coverage of $100,000 per depositor at each institution.

Since 1974, American Share has been the nation's largest provider of private share insurance. It insures only credit unions and is regulated by the Ohio departments of insurance and commerce. Its Web site emphasizes that "member accounts are not insured or guaranteed by any government or government-sponsored agency."

American Share boosts its reserves by requiring member credit unions to set aside 1 percent of deposits for American Share to hold, Simons said.

"They don't pay us interest on that," he added.

Simons said although Credit Union 1 makes mortgages, it doesn't buy or sell them.

"Everything we do we keep internally," he said. "We hold all of our own mortgages."

Credit Union 1 has seen 18.25 percent growth in deposits this year, Simons said.

"There's a flight to quality with people taking money out of the stock market and putting it into insured savings accounts," he said.

Two credit unions – one of them in East Central Illinois – are in the midst of merging into Credit Union 1, Simons said. One is the Douglas Credit Union in Tuscola, a 300-member credit union that's open to anyone who lives or works in Douglas County. The other is the J.W. Hobbs Credit Union in Springfield, which also has about 300 members.

Simons said the Douglas Credit Union merger is scheduled to take effect Dec. 1, with Credit Union 1 planning to lease space for a new office at the Tanger Outlet Center in Tuscola.

In November 2007, Credit Union 1 absorbed the 3,000-member Bell General Office Credit Union in the Chicago area. Simons said the credit union plans to open a new office in Hoffman Estates to serve those members.

Today, Credit Union 1 has about 20 branch offices, many of them in the Chicago area but also in the downstate Illinois communities of Charleston, Springfield, Normal and Rockford, as well as in Indianapolis.

The next-largest credit union based in East Central Illinois is the University of Illinois Employees Credit Union, with about $174 million in assets.

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