CEO Heads South, But Numbers Don't

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SAN DIEGO-When Teresa Halleck moved from being president and CEO of $7.2-billion The Golden 1 in Sacramento, Calif., to $4.9-billion San Diego County CU, it could have been said she was moving out of the frying pan and into the fire.

Not only is San Diego a highly competitive financial services marketplace, it had the distinction of being the first part of the state to watch home values plunge. Indeed, Halleck said foreclosure-related aggregate Notice of Default (NOD) statistics for the County of San Diego had shown improvement during the summer, but recently have risen back to the levels seen during the spring of this year.

According to, NOD fillings ran 2,176 and 2,412 for the months of August and September, after having fallen below that level during May, June and July. On a brighter note, the report said year-over-year NOD filings are down for the first 10 months of 2010 compared to 2009.

"Based on NOD filing statistics, I think it is fair to say consumer defaults triggering NOD filings in San Diego County most likely peaked in late 2008 or early 2009," Halleck said. "From the San Diego County Credit Union perspective, management believes we have primarily worked through the most significant portion of the local real estate market decline."

However, she cautioned, despite the year-over-year decline in the average NOD filings for the county, management does not anticipate a rapid rise in local housing values.

"And that translates into a slower overall local market recovery as consumers continue to be cautious with discretionary spending," she observed. "Requests for real estate loan modifications have significantly declined in comparison to 2009, another good sign that the local economy is stabilizing and perhaps beginning to recover.

Halleck said she and her management team are monitoring several sources to keep an eye on the all-important housing market, including the S&P/Cash-Shiller home price index, the National Association of Realtors median home price, and MDA DataQuick median home price. Not only have all of these factors pointed up over the past 12 months, local media recently reported the San Diego County Index of leading indicators has increased since the first quarter of this year.

Thanks in no small part to an improving local economy, San Diego County CU recorded strong numbers in the third quarter. Net income for the quarter was approximately $22.7 million. Net income through the first three quarters was $43.3 million, despite paying two assessments: $5.2 million for NCUSIF and $5.6 million for corporate stabilization.

Halleck said SDCCU put less money in its Provision for Loan and Lease Loss during the third quarter because its loan portfolio was not growing and because the Allowance for Loan Loss reserve account was "more than adequately funded" as of Sept. 30.

"We also accrued for the NCUA assessment, so the cost was spread out and didn't impact just the third quarter," she said.

There is both good news and bad on the auto loan front. Halleck said the SDCCU's consumer lending group reported total vehicle sales for August in San Diego and Orange counties was up compared to August 2009. However, Riverside County vehicle sales had a year-over-year decline.

"Despite stabilized vehicle sales in San Diego and Orange counties, the credit union continues to see fierce competition for auto loans in our markets as competitors stretch to maintain and gain volume," she said. "San Diego County Credit Union has remained a reliable auto loan lender for its members and the community at large and continues to offer tremendous value for qualified borrowers. With the average age of autos continuing to increase as consumers remain cautionary about discretionary spending, we look forward to the day when consumers realize their need to purchase another vehicle can no longer be prudently delayed and we can help them meet their borrowing needs."

When Halleck made the move 500 miles south on Interstate 5 in August, she found SDCCU already doing a "great job" managing costs and did not have to implement drastic expense-cutting initiatives.

Reinforcing Expense Culture

"Instead, I have reinforced that our culture of strong efficiency and cost control is a true organizational strength and my expectation is that we continue to retain and enhance this competitive strategic advantage."

Looking forward, Halleck said she can see "glimmers of positive economic signs" in SDCCU's local economy. "San Diego County Credit Union remains well positioned to meet the needs of the communities we serve. Management continues to carefully monitor trends and market indicators. We anticipate the local market will recover somewhat slowly over a multi-year period of time."

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