since 1935 | #justbeyourself

Volume 6 | Issue 5 | May 2023
Our Mission: Providing financial solutions for every stage of life.

Dear Valued Member,

The Community First team understands how much our members value the stability of a credit union with a 90-year history of serving the community and always placing their banking needs first. Our institution was created in 1935 to serve Duval County teachers, and while our member base has grown, we are still the same organization at heart, steadfast in our purpose of helping our members live their best lives.

We earn our members’ trust by providing convenient services, competitive rates and a steady, conservative approach guided by experienced leaders. Many of our people have been with our credit union for decades. One of them — Brenda Cornwell — recently celebrated her 50^th anniversary with us. When I joined Community First as president and CEO in 1996, Brenda had already been here for 23 years! (I’ll tell you a bit more of Brenda’s interesting story later in my report.)

Our credit union’s quiet consistency stands in sharp contrast to financial institutions that occasionally make national news for all the wrong reasons, such as the recent collapse of Silicon Valley Bank. Although SVB was a much different entity than Community First — and the combination of circumstances that brought it down bore little or no resemblance to our situation — I thought it would be helpful to take time this month to reassure our members about Community First’s financial health.

Putting members first

Because Community First members are our owners as well as our customers, our priority is always crystal clear — you. In contrast, SVB was a commercial bank incentivized to generate profits for shareholders. By specializing in business banking for a narrow band of clients in the technology sector, with large exposure to venture capital firms, its deposit base was inherently volatile. Plus, it held a high percentage of large deposits above the $250,000 limit of deposit insurance per account provided by the Federal Deposit Insurance Corporation (FDIC). The trouble began when customers, knowing their deposits were largely uninsured, grew concerned that the bank was in danger of being unable to cover a potential surge in withdrawals. They rushed to move their money and in the process triggered the very scenario they feared.

Here at Community First, 93 percent of our deposits are insured by the National Credit Union Administration, our industry’s equivalent of the banking system’s FDIC. Our average account balance is about $13,000, well below the $250,000 insurance limit. We also serve a wide range of people and businesses, which provides us with the stability that comes with a diversified member base.

In addition, we’re far less exposed to the risk of falling bond prices that has caused concern across the banking industry and was the root of the problems at SVB. Simply put, many financial institutions experienced significant deposit growth in 2020 and 2021. Interest rates were at historic lows, and banks looked for relatively safe places to invest their cash that would provide the best return. In that financial environment, long-term government securities seemed the best option.

But when the Federal Reserve began raising interest rates to fight inflation, the market value of those long-term, low-interest bonds began to fall significantly. In normal times, institutions would be able to hold these securities to maturity and avoid taking a loss on them. In SVB’s case, however, the venture capital firms and technology companies it served began to consume the cash they’d built up in prior periods. With insufficient cash on hand to fund those withdrawals, SVB was forced to sell a portion of its investment portfolio at a loss of nearly $2 billion, setting in motion the chain of events that led to the bank’s failure.

Stability you can trust

At Community First, we have always taken a conservative approach to managing our finances. Growth in deposits has remained steady over the years, and it is distributed evenly among the members and businesses we bank throughout the community. With access to over $400 million in liquidity, we have the ability to hold our investments to maturity and meet members’ deposit withdrawal needs. Granted, the rapid rate increases caused by the Federal Reserve’s actions have also caused value of our investment holdings to lose value. But the unrealized losses on our investments are quite low in comparison to the industry, amounting to just 15 percent of our total capital reserves. At the end of 2022 our net worth ratio, a critical measurement of financial stability, stood at 12.54%, well above the 10.68% average of our peer group.

To the average member, the financial details of how we ensure the stability of our credit union might be hard to fully understand, but there’s a very human element to our approach that is readily visible in the people who make Community First the trusted institution it is. I’m proud to say that we have a great, diverse team of employees, led by individuals like Brenda Cornwell, whose 50-year career with us embodies the enduring values of our credit union.

Brenda was a junior at Wolfson High School when she came to us as part of a work-study program, and she quickly made an impression as a quick learner and dedicated employee. She worked her way up through the Accounting Department, and her first leadership position was overseeing the Information Technology Department, where she was responsible for our first computer system and the installation of our first ATMs. She was named manager of accounting in 1982 and promoted to director in 2020.

Brenda sets an example for all of us by understanding our members’ needs and why they choose our credit union. She works hard to ensure we’re keeping up with the times by adopting new technologies while always staying true to our mission. I’d like to applaud Brenda for her service and to thank all of our employees and members for recognizing what continues to make Community First a trusted, community-oriented financial services provider. ■