The following letter is being mailed to members with the next monthly billing statement:
September 16, 2010
Dear Member,
I am writing to let you know that all variable interest rates to members will increase by 0.25% effective October 1, 2010.
There are two primary reasons for this increase. First, market interest rates for short-term debt have increased slightly in recent months. This has increased our cost of funds. Second, the risk profile in our loan portfolio has increased in the past two years as a result of the general economic downturn which has affected nearly every industry we serve. More risk calls for higher interest rates to compensate for the increased possibility of default and loss.
We understand that many of our borrowers are facing difficult times. We lowered our variable interest rates considerably during the financial crisis of 2008, to the lowest rates in our history. We waited as long as possible before increasing rates, but we now find it necessary to increase rates to maintain the Association’s strong financial position. We believe that this modest increase of 0.25% for all borrowers, our first general interest rate increase since July 1, 2006, is appropriate given the increased level of risk in our loan portfolio.
Please feel free to ask your loan officer any questions you may have about your interest rate.
Thank you for your continued patronage and best wishes for your financial success.
Sincerely,
George S. Putnam
President and CEO
