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Credit Union Is Worth More Than Its Rates

I recently attended the annual meeting of RAFE Federal Credit Union, which I joined last year.

The meeting proved worth my while, in more ways than one.

RAFE is a community-oriented credit union headquartered in Riverside, Calif.

Membership is restricted. Eligible categories include government employees, military personnel and veterans, area dentists and (strangely) local lawyers like me.

RAFE is relatively small. At year-end 2011, it had total assets of $20.83 million, equity of $1.91 million, 3,927 members and eight employees in two locations.

I joined RAFE because of competitive CD rates and National Credit Union Administration insurance.

RAFE posts a 3-year jumbo CD rate of 1.77% APY and a 5-year jumbo CD rate of 2.53% APY — rates that have held steady for quite a while. That’s significantly better than what you’ll find on our CD Rates Leaderboard.

Despite my original attraction to RAFE for cold-blooded financial reasons, I’ve been impressed with this modest institution’s local focus, pleasant and capable staff, and member-driven service approach.

In other words, for attributes which, despite protestations to the contrary, big-picture types like Tim Geithner and Ben Bernanke care little about.

The relatively brief formal meeting (attended by about 30 members) was sandwiched between a casual cold-cut supper and the cutting of a delicious lemon cake celebrating RAFE’s 49th anniversary.

Management presentations focused on how RAFE had successfully implemented an NCUA-mandated “net worth restoration plan” following recession-related losses in 2007-08.

RAFE also had to write off its investment in a failed “corporate” credit union in which it and other credit unions had participated.

The remarkable thing was that RAFE increased its net worth/total assets ratio between 2008 and 2011 from 5.63 (“undercapitalized”) to 9.17 (“well capitalized”), not by pulling in its horns like big banks, but by doing what it was chartered to do:

Growing its deposit base among, and lending money to, the community. (Vehicle loans are a specialty.)

It worked. RAFE currently carries a 4-star Bankrate Safe & Sound Rating.

A pleasant surprise came at the end of the meeting, when the CEO conducted a drawing for envelopes containing prizes to thank members for coming.

Expecting perhaps a gift certificate to a local eatery, I found hard U.S. currency instead.

I won’t reveal the president whose face appeared on the bill.

Let’s just say it more than paid for the gas burned on my 165-mile round-trip journey — and I’m seriously considering attending next year’s 50th anniversary meeting.

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