SACRAMENTO, Calif. – California credit unions are reporting better numbers for the first quarter, but economic indicators have yet to point to an end to the state’s depressed economy.
“Things have not turned around in our market, that’s pretty clear,” said Teresa Halleck, president of The Golden 1 CU, which broke back into the black for the first quarter with a $192,000 net, after a $23.1 million loss for 2009.
The $7.8 billion credit union, with members in 34 of the state’s 58 counties, has yet to see a stabilization in delinquencies and continues to add funds to its allowance for loan losses as the state’s unemployment rates continues at one of the nation’s highest and housing prices have yet to rebound. “I think we’re going to bounce around like that for a while,” Halleck told Credit Union Journal yesterday.
Some California credit unions are showing signs of a rebound. Bay FCU, which lost $9.9 million last year, reported a $703,000 net for the first quarter. Patelco CU, which had a $14.6 million 2009 loss, reported a $9.4 million net for the quarter.
Other credit unions that reported big losses are reporting smaller losses for the first quarter. Kern Schools FCU, which lost $40.6 million last year, reported a $2.5 million loss for the first quarter. NuVision CU, which had a $6.2 million loss for 2009, had a $22,000 loss for the quarter. American First FCU, which had a $14 million 2009 loss, reported a $1.7 million loss for the first quarter. Water and Power Community FCU reported a first quarter loss of $290,000, after a $3.8 million loss for last year. Alliance CU had a first quarter loss of $121,000, after a $6.8 million loss last year.
“We’re not in true recovery mode yet, but are seeing some positive signs,” said Daniel Penrod, financial analyst for the California CU League. He cited an apparent stabilization of housing prices in some of the state’s markets and flat growth in the high jobless rate, which was 12.6% for March. Another positive sign, said Penrod, is the big inflow of deposits into the state’s credit unions. “That means credit unions have more funds to lend,” he added.
Still, the league analyst said he expects delinquencies to be either flat at the currently high rate or rise slightly, especially as the jobless rate remains high. “Credit unions in California are tied closely to employee bases,” explained Penrod. One troubling sign is the financial troubles experienced by the state government and municipalities, many of them served by credit unions. The high unemployment, he said, “will take its toll.”
“What we’re hearing from credit unions is for the most part, they’re expecting a very slow recovery,” said Penrod.
That will depend on several things, according to The Golden 1's Halleck, including a return of the housing markets and consumer confidence, and what NCUA assesses credit unions are part of the corporate credit union bailout.
