AFTRA-SAG FCU Asks Members to Move Their Deposits

The Los Angeles Times is reporting that AFTRA-SAG Federal Credit Union has asked its large depositors to withdraw funds from their deposit accounts and move those funds to another institution.

In a letter to members, the credit union wrote: “Due to the unusual economic and market conditions, we are asking you, a select group of our large depositors, to move a portion of your funds to another institution. This request is a temporary one, so we would like to explain why we are making this request: The Credit Union is ‘flooded with cash.’”

The key issue for the credit union is that it is having difficulty generating earnings to keep its net worth ratio above 7 percent, the minimum requirement for being well-capitalized. The credit union reported a loss of $3.9 million for 2009 and through the first 9 months of 2010, the loss was almost $807,000. As a result the credit union is having to shed assets and deposits to keep its net worth ratio above the 7 percent threshold.