TAMPA, Fla.-The third quarter was one of the worst periods ever for credit unions, as red ink washed over many of the biggest CUs in the country, some for the first time.
The continuing decline in the real estate market in southwest Florida forced Suncoast Schools FCU, the state's largest CU, to move an additional $24 million into its allowance for loan losses, creating a whopping $24.7-million loss for the quarter-and $51.9 million year-to-date. Several other credit unions in the hard-hit Florida markets reported large losses. GTE FCU, Tampa, reported a $2.7-million third quarter loss, creating a $21.9-million loss for the first three quarters; Fairwinds CU, Orlando, had a $2.3-million loss for the quarter and an $8.8-million loss year-to-date; and Jax FCU, Jacksonville, reported $3.4 million in red ink for the quarter and a $5.5-million three-quarter loss.
Tom Dorety, Suncoast Schools' CEO, attributed his $6.1-billion credit union's growing losses to the deteriorating conditions in the Ft. Myers area, where an ill-fated credit union-backed get-rich-quick real estate scheme has pushed real estate values down as much as 50%. The scheme caused the failure of Norlarco CU and Huron River Area FCU, and helped sink a third, New Horizons Community FCU (see related story, page 1).
In Arizona, Arizona FCU reported another $8.9 million in losses for the third quarter, bringing its year-to-date losses to $51.4 million; Arizona Central CU had a $900,000 loss for the quarter and $1.8 million year-to-date; SunWest FCU reported a $1.6-million quarterly loss and a $3.4-million loss year-to-date. In Nevada, Clearstar Financial FCU, Reno, had a $3-million loss for the third quarter and a $4.6-million loss year-to-date; Community One Financial FCU, Las Vegas, a $600,000 quarterly loss and $1.8 million year-to-date.
CUs in California continued to report big losses, some for the first time. SchoolsFirst FCU, the $7.8-billion CU formerly known as Orange County Teachers FCU, plunged into the red for the first time to the tune of $28.7 million for the third quarter. Arrowhead Central CU also fell into the red for the first time, with a $6.6-million third quarter loss. Also, Wescom Central CU reported a $21.6-million loss for the third quarter and a $32.5-million loss for the first three quarters; Travis CU reported a $6-million loss for the quarter and $7.7-million loss year-to-date; Kern Schools FCU had a $9.3-million loss for the third quarter and a $15-million loss for the first three quarters; Visterra CU reported a $1.2-million loss for the quarter and a $7.9-million loss for the year; Patelco CU had a $1.3-million third quarter loss and a loss of $5.3 million year-to-date and California Coast CU had a $4.3-million quarterly loss, creating a $6.7-million loss for the first nine months.
Two California CUs taken over by NCUA in recent weeks reported growing losses, raising doubts about their ability to survive the current turmoil. Valley CU, a one-time $310-million credit union in San Jose, reported a $3.1-million loss for the quarter and an $8.9-million loss for the first three quarters of 2008. And High Desert, a one-time $190-million CU based in Apple Valley, reported a whopping $6.2-million loss for the quarter and a $10.8-million loss for the year-to-date. The CU has 27% of its loan portfolio 60 days or more past due.
Daniel Penrod, a research analyst for the California CU League, said credit unions in California and Nevada continue to suffer from the real estate bust. "While credit unions are not part of the disease, they're definitely dealing with the symptoms," said Penrod, who noted home prices continue to decline. "I see this trend continuing through the end of the year and into next year, before it finds an equilibrium. The areas that are seeing the largest negative impact are those that saw the highest positive impact during the boom."
Others around the country were also reporting big losses last week. Allegacy FCU in North Carolina, reported a $1.8-million loss for the third quarter and a $13.4-million loss for the year-to-date; Centris FCU, Nebraska's largest credit union, fell back into the red for the quarter with a $6.9-million loss, bringing yera-to-date losses to $6.4 million; Pocatello Railroad Employees FCU in Idaho reported a $300,000 loss for the quarter and $725,000 loss for the year; CU of Texas reported a $400,000 loss for the quarter and a $2-million loss year-to-date; Sunmark FCU in Schenectady, N.Y., a $2-million third quarter loss and $8.2-million loss for the first three quarters; Alabama Central CU a $610,000 loss for the quarter and $1.3 million for the year.
