RIVERSIDE, Calif.-Altura Credit Union, which has struggled with profitability, is reporting net income of $3.1 million on total assets of $693.6 million for the second quarter.
The Q2 net income is an improvement from a $1.6-million loss in Q1, and the loss of $4.1 million it reported for the same period in 2010. Altura's net worth ratio climbed to 6.26%, making it "adequately capitalized," up from 5.56% in Q1. The credit union posted an overall loss of $5.8 million loss in last year.
Mark Hawkins, Altura's CEO, told Credit Union Journal he was pleased to see the numbers turn from red to black, but said it was a "bittersweet" accomplishment.
"For the average consumer out there, things are really tough," he said. "Unemployment is still high, property valuations have not budged for 29 months after falling dramatically, and there is not a lot of hiring going on. As consumer sentiment goes, so goes our business, and sentiment is flat."
The good news: Hawkins said Altura is finding it can perform "very well" and "very profitably" at current market levels. On a month-to-month basis, he reported, the credit union is "doing well" even though its lending is negative. "
Members are retiring debt at record levels and we are not seeing much in the way of applications for credit so our loan production is absolutely abysmal," he said. "But, our expenses are low, cost of money is extremely low and we are getting good non-interest income."
According to Hawkins, its models show capital will be back above 7% by the end of the year.
Operating expenses are down $700,000 since Jan. 1, the third straight year it has cut such expenses, in part by closing underperforming branch locations and converting others to all-electronic branches. [See related story, "
Hawkins said write-offs from loan losses continue to decline. In July 2010 it wrote off $2.7 million of bad loans, whereas last month that figure was $1.6 million.
"We are having to put less money into our allowance, so more money goes to our bottom line," he said. "We are building capital and building net worth, and we don't see that changing between now and the end of the year. We would like to see more loan production, but this level is sustainable."
It will be at least another nine or 10 months (late spring 2012 at the earliest), before the credit union starts experiencing an increase in lending, he predicted.
"It remains to be seen when Washington will get its act together and people can start living their lives with more confidence. We are here to serve our members, and right now they are so frightened by what is going on they are not taking out any loans. We are making the best of a very tough set of circumstances."
