Do You Expect To Have A Profitable 2nd Half?

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SAN DIEGO-Credit Union Journal asked attendees of the CUNA CFO Council conference here: Do you expect to be profitable in the second half of 2011? What will affect your credit union's bottom line the most, and why?

Jim Sessa, SVP-administration and CFO, Coast Central CU, Eureka, Calif.
Yes. We are very optimistic. We are looking at our data and our members are using their debit and credit cards more, so we believe consumer spending is going up. We have 38% market share in auto lending and kept that during the recession. Auto sales are on the increase and the economy is moving forward, albeit slowly. As gas prices are coming down a little bit, we think that will help consumer spending, also.

There are some storm clouds. The California budget situation is something we are watching closely. We have a state university and a lot of government employees in the three counties we serve. Also, there are national parks in those counties that may be closed next year.

But all in all, things are going well. We have low delinquencies and charge-offs. We have been using our capital to overpay on deposits to help our senior members who are on fixed income get through this. We are the No. 1 real estate lender in our three counties.

George Kite III, VP and CFO, Call FCU, Richmond, Va.
Yes, but because we are able to reduce our cost of funds above and beyond what we had originally projected. We don't need the money because loan demand is really low in our area. It takes so long to turn around the top line, so cost of funds is one of the only levers we can pull.

Sandy Wiederholt, president, Ecolab CU, St. Paul, Minn.
Yes. We have cut a lot of expenses. Because we have slow loan growth, we have purchased an indirect loan portfolio from another credit union. We are a $9.1 million credit union with a single sponsor. The company is doing well and is a very good sponsor for us.

Theresa Blageo, president and CEO, Eaton Employees CU, Eden Prairie, Minn.
We expect to be profitable, but not by much. We have been able to increase our fee income on loans and from NSFs. We have a single sponsor that had a lot of cutbacks, but now the company is rehiring.

David D'Annunzio, SVP-CFO, Heritage Trust FCU, Charleston, S.C.
Yes, emphatically. Things are really starting to look better for us. No one wants to go through economic turmoil, but it forced us to look at our cost structure and make changes. We were able to do so without affecting our members adversely. We are more profitable today because of this.

One thing we did was negotiate with vendors. We took a tougher stance and were able to receive discounts on contracts that renewed during the recession. The vendors knew we were struggling, not just trying to get the price down. Also, we looked at our staffing models. We studied activity levels at branches to ensure labor was distributed efficiently. Some people left by attrition, but we did not lay anyone off.

South Carolina is finally starting to see the employment situation stabilize. The folks who are going to lose their jobs have. We are seeing delinquencies and charge-offs improve. We have had four or five months of positive change. But we are not saying we are completely out of the woods yet. We have REOs and TDRs that we are dealing with, but those are trending better, also.

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