Defense CUs Win Battle Over Financial Malaise
VIENNA, Va. – The nation’s defense credit unions, most of which successfully avoided the financial meltdown of 2009-2010, are continuing to post strong financials for the first half of 2011 – many as if there never was a national economic crisis.
Pentagon FCU, the nation’s third-largest credit union, reported $83 million in net income for the first six months, more than its net for all of 2010, and a strong 1.1% return-on-assets.
New Hampshire’s Service CU posted a first half net of $18.4 million for a 1.96% ROA; Alabama’s Redstone FCU a 1.16% ROA; and Andrews FCU, Hanscom FCU, Eglin FCU and Barksdale FCU all reported strong nets for the first half of 2011.
The durability of the defense credit unions, according to CUNA’s Chief Economist Bill Hampel, could be attributed to the fact they have been less affected by the two main forces driving down credit unions’ financials the past three years: job losses and housing. “They don’t have unemployment,” said Hampel.
“There’s a couple of reasons,” said Jennifer Sadler, chief spokesperson for Navy FCU, which reported more than $366 million of net income for the first six months – almost the same amount it earned for the first nine months last year – working out to a 1.6% ROA (annualized).
One, she said, was the 2008 expansion of the nation’s biggest credit union outside its core Navy field of membership to include all employees of the Department of Defense – allowing it to add an average of 1,500 new members every day. “A lot of folks are just starting to discover us,” Sadler told Credit Union Journal yesterday, of expanding recruitment among the Army and Air Force.
Another reason is the rapid growth in new branches. Still another is the credit union’s 0% balance transfer offer.
All of this puts the $44 billion credit union on pace to top last year’s banner year. “We had an incredible year last year, it was one of our best years ever,” said Sadler.
Navy Federal expects the growth to continue through 2011 and top 2010’s addition of 229,000 new members with more than 300,000 projected to enlist before the year is over.