WASHINGTON – Two of the nation’s largest credit unions, Navy FCU and Pentagon FCU, were able to float against the prevailing tide among credit unions last year to post healthy bottom lines.
Navy FCU, the world’s largest credit union, was able to post net income of $236 million, a 7.8% ROA, even as the $33 billion credit union was adding a record 30 new branches.
Pentagon FCU grew its assets by 20% last year, and net income by 8.4%, to $118.4 million, for an ROA of 1.15%.
Frank Pollack, president of Pentagon FCU, attributed last year’s success by the $11.2 billion credit union to two things. First, the fact that his defense-based membership, both military personnel and contractors, has not had job cuts, so his members are not feeling the same financial stress as those in certain parts of the country. “That makes a huge difference,” Pollack told The Credit Union Journal yesterday.
And second, the credit union continues to run a lean ship, with one of the lowest expense ratios among large credit unions. “That gives us a little bit of room when times get tougher,” said Pollack.
But Pollack expects difficulties down the road, and has projected a rise in his credit union’s modest delinquency ratio (just 0.26% at year-end) and charge-off ratio (0.23%).
The Pentagon CEO, who has been with the credit union for more than 30 years, remembers the effects of the country’s demilitarization after the Vietnam War, and is looking ahead to similar cutbacks when the Iraq war is concluded. He said the credit union is much more diversified now and is better prepared for major shifts in military deployment.
