Member Notice Regarding NCUA Bailout of U.S. Central FCU

On January 28, 2009, the National Credit Union Association (NCUA) approved the biggest rescue in the history of credit unions with a $1 billion cash infusion into U.S. Central Federal Credit Union, the central bank for credit unions, to cover a $1.1 billion loss experienced in 2008. This was followed up by an article in the January 29^th Wall Street Journal: “U.S. Moves to Bail Out Credit Union Network.”

As we understand this could create some concern among our valued members, we wanted to provide you with some information regarding how this affects Los Angeles Police Federal Credit Union (LAPFCU).

• The announcement is related primarily to the U.S. Central Federal Credit Union which posted an unexpected $1.1 billion loss for 2008. The $1 billion infusion is dedicated to covering that loss. U.S. Central serves as the main clearinghouse for wholesale credit unions.
• LAPFCU is not a wholesale credit union and although we have investments with wholesale credit unions, we have not experienced any losses through those relationships.
• We felt it important to let members know that LAPFCU is not responsible for U.S. Central or its investment policies, nor are we designated to receive any bailout funds.
• LAPFCU is safe, sound and secure. We have always maintained prudent, conservative fiscal policies which have resulted in our ability to achieve strong levels of capital. We currently have $93 million or 13.15% in capital, nearly double the level required by the NUCA to earn their classification as “well-capitalized.”

Finally, we understand these may be distressing times for members as the country continues to work through its financial issues. And, as your partner in a proud tradition^SM, we want to reassure you that your assets with us are safe, sound and secure. We will continue to keep you apprised of important updates on this subject.

Sincerely,

G. Michael Padgett

President and CEO