The purpose of this communication is to provide a brief progress report on the work we have completed toward the development of our new business model and to inform you of other matters of importance. 

VACORP has been working with Impel Consulting Group for about one month and I believe excellent progress has been made. We have narrowed our focus to the business models we believe will enable you, our member credit unions, to continue receiving the quality of services you require to successfully meet the needs of your members. The VACORP staff and Impel are scheduled to present their analysis and findings to the VACORP Board of Directors at its Tuesday, April 20, 2010 board meeting.

I plan to provide a brief summary of the Board’s deliberations concerning the proposed business model at the VACORP Annual Meeting in Reston, Virginia on Thursday, May 6, 2010. The following week, members will have the opportunity to participate in an in-depth discussion of the proposed business model in smaller, regionalized Town Hall Meetings. 

The meeting schedule is as follows:

                Belvoir FCU       Tuesday, May 11, 2010             10:00 a.m. - 12:00 p.m.

                ABNB FCU         Wednesday, May 12, 2010         9:30 a.m. - 11:30 a.m.

                Henrico FCU      Wednesday, May 12, 2010         2:00 p.m. - 4:00 p.m.

                VACORP FCU      Thursday, May 13, 2010           10:00 a.m. - 12:00 p.m.

More details, including registration information, will be available by Friday, April 9^th. The meeting held on Thursday, May 13^th at VACORP, will be setup so that any member unable to attend an in-person session can join via teleconference. Like the Town Hall Meeting in Richmond, questions can be submitted via email.

I’d like to share with you a couple of items of interest concerning recent NCUA announcements. First, at a meeting of corporate credit unions held with NCUA at the end of February 2010, NCUA advised that corporate credit union mergers would not be considered for approval until after Rule 704 has been finalized. 

Second, some of you may have read Chairman Matz’s recent statement that the final resolution of the legacy assets on corporate credit union balance sheets is now expected to be announced by the end of June 2010. (Legacy assets are investments, owned by some corporates, in mortgage-backed securities and commercial debt obligations that have been impaired due to market losses resulting from poor credit quality and illiquid markets.) As a reminder, VACORP does not have any legacy assets on its balance sheet. I believe that NCUA will provide a period of time for credit unions to review and possibly comment on the resolution of the legacy assets before the issuance of Rule 704 by late summer or early fall of this year. Accordingly, any consolidation of corporate credit unions likely will not occur before late 2010 or early 2011.

The credit union movement is a cooperative movement. I firmly believe that by working together, cooperatively, VACORP and its member credit unions can remain successful. VACORP is fully committed to implementing a new, viable business model that will continue to provide you with the high-quality products and services you expect in order to meet the needs of your members. Your continued support of VACORP is very much appreciated.

Don Chapman

President/CEO

VACORP FCU