March 21, 2009

Dear Member:

On Friday March 20th, the National Credit Union Administration (NCUA) placed U.S. Central and WesCorp into conservatorship. As is standard practice, NCUA has removed the top executive of both institutions, as well as their boards. NCUA has a team at each corporate and has assumed control of both organizations, viewing both as going concerns. In addition, they have left the bulk of management and staff in place. Effectively this means that all of the services provided by these institutions to their members will continue uninterrupted.

In its announcement, NCUA stated that the intent of this action is to “protect retail deposits and the interest of the National Credit Union Share Insurance Fund (NCUSIF), as well as to remove any impediments to the Agency’s ability to take appropriate mitigating actions that may be necessary.” Having received and analyzed the independent study it commissioned on the credit risk in the investment portfolios of all the corporates, NCUA concluded that conserving U.S. Central and WesCorp was necessary. NCUA has judged that “the remaining 26 corporates show a level of portfolio risk that NCUA considers manageable from the standpoint of capital adequacy.”

Let me assure you that all services provided by Members United will continue uninterrupted. Your regular shares and certificates with us remain fully insured up to $250,000, and 100% guaranteed for balances above that, through December 31, 2010 (as do our shares at U.S. Central). This is critically important as liquidity remains a key component of the Corporate Stabilization Plan to help minimize the actual losses the system takes on these investment portfolios. We continue to evaluate the exposure of our capital investment at U.S. Central, and will inform you immediately when additional information is available in that regard. Members United has no exposure to WesCorp.

To assist credit unions in understanding this action, including the revised total liability for the insurance fund, NCUA issued letter 09-CU-06, placed a video announcement from Chairman Fryzel on their website, and announced a webcast for Monday, March 23rd beginning at 2 PM eastern. Links to each of these can also be found in the Financial Transparency Center on Members United’s website, as well as on NCUA’s website.

I believe that a response to NCUA on the advanced notice of public rulemaking (ANPR) concerning the corporate system is now even more important than ever. Whether you respond to the ANPR in detail, or simply send a letter to each NCUA board member stating your views on the importance of the corporate system and how it should be constructed, your voice must be heard to ensure that the corporate system of the future meets your needs. Click here to view a copy of our draft response.

In a separate action, last week the Financial Accounting Standards Board (FASB) placed two proposals out for comment regarding Fair Value Accounting during periods of severely dislocated markets, click here to view these documents. These proposals mirror our suggestions in a comment letter sent to them last fall. We believe that if implemented, these changes would fairly present our financial condition in this time of severe market dislocation. To minimize the effect of depressed market pricing on any other than temporary impairments (OTTI) we may incur, I urge each of you to submit a response in favor of these proposals, with a further comment that they should apply retroactively to December 31, 2008.

As a reminder, for those who could not attend one of our town hall meetings in person, Members United will be hosting a webinar version of that meeting on Wednesday, March 25th beginning at 10 AM eastern time, click here to register. Finally, we expect to post our most recent portfolio update this week.

These remain difficult times for all of us, as the nation remains in the grip of a recession deeper than any since the Great Depression. Confidence in the credit union system, and maintaining the liquidity we need to avoid selling securities at fire sale prices, are critical to working through this cycle. By sticking together, we can come through this global economic crisis with a stronger, more effective credit union system to serve members' financial needs. I thank you for your continued usage and support of Members United.

Sincerely,

Joseph P. Herbst