RIVERSIDE, Calif.-Altura Credit Union, which has gone through tough times in a tough market, doubled its net income in 2012 over 2011, giving the $655-million CU its "best year in history."
Altura reported net income of $17.49 million for the year ended Dec. 31, 2012, more than double the $8.43 million reported at the end of 2011. Assets are up 1.9% over 2011, the first increase in asset size since 2007.
Altura reported a net worth ratio of 10.36% at the end of 2012, also the highest in its history and above the 10.22% national average for its peer group. At the end of 2011, Altura reported a net worth ratio of 7.84%.
Altura has been a poster child for the troubles many CUs in California have faced in recent years. It serves the "Inland Empire" area of Southern California, east of Los Angeles, a region that was particularly hard hit by the recession and has been slow to recover.
ACU earned made $7.7 million in 2007. But it then lost $13.7 million in 2008, lost $20.1 million in 2009, and another $5.8 million in 2010. A net worth ratio of 7.67% in December 2008 ("well capitalized") dipped to 5.61% in 2009 ("undercapitalized"), then 5.81% in 2010 ("undercapitalized").
'Quite A Year'
CEO Mark Hawkins told Credit Union Journal several factors contributed to Altura's net income gains in 2012, including ongoing expense reductions, reductions in ALL, and an increase in auto lending. "It really was quite a year, and we are obviously very pleased with the results," he said. "We anticipated that might happen this year, but our budget did not reflect it because that would assume the market would continue to improve."
Hawkins said management put together a "conservative" 2012 budget that assumed "good" results, then was happily surprised when credit quality "improved greatly."
"We had fewer delinquencies and charge-offs, a substantial decline in foreclosures and many long-term delinquent loans were resolved positively," he said.
Delinquencies Decline
Altura's net loan losses in 2011 were $20 million, versus $9.8 million in 2012. Delinquencies were 97 basis points at the end of 2012. Hawkins said normal historical patterns suggest continued decline in delinquencies over the next few months.
The downside is loan balances continue to fall as members retire debt. Hawkins does not expect any growth of loans in 2013, although he said there might be some month-to-month improvement in the fourth quarter.
"The key thing is our credit quality has improved significantly and continues to do so," he said. "We feel very fortunate and do not see that trend changing. We are looking for another good year in 2013, but not on the same level as 2012. 2013 will be a solid year, and we hope that will translate into a little more loan production in 2014."
Altura said its newly improved financial position has enabled it to reach out with new products designed to help people rebuild their financial health, including Reliance Checking, developed to assist individuals who have had financial difficulties such as unpaid accounts and negative history reported to ChexSystems ("2nd-Chance Checking Proves Popular," Dec. 24, 2012].
