ORLANDO, Fla. - At McCoy FCU two weeks ago, a member of long standing with a mortgage and two car loans walked into the credit union and handed over the keys to one of the cars, because she was no longer able to make the payments on both her and her husband's cars.
"We've got over 100 cars for sale," said Alvin Cowans, president of the $400 million credit union in one of the hard-hit Florida markets. "All of a sudden you're running a used car lot." Wescom Central CU, in Pasadena, Calif., epicenter of the nation's mortgage crisis, reported almost $46 million losses for the last six quarters-and expects to report more losses this quarter. "Economists are saying they expect things to bottom out around here in the next six to 12 months," said Darren Williams, CEO of the $3.7-billion CU.
"This is hugely impacting credit unions," said Bert Fallon, president of Allied Healthcare FCU, Venice, Calif. "Our real estate loans have not been that affected, but its had a terrible toll on our members."
"It's a spillover effect. We didn't do any of the subprime loans, but some of our members got them from other lenders," said Brad Beal, president of Las Vegas-based Nevada FCU, who has seen his CU's delinquency ratio rise to 1%-from just 0.1% last year-and charge-offs triple to 0.6%.
Beall worries about the overall condition of the Nevada economy, with tourism and gaming revenues down and lay-offs at Las Vegas casinos rising. "There's mixed-signals in Las Vegas. The number of homes being built are still rising, but the (prices) are down," he said. "Right now, growth is not our focus. Threading our way through this economic crisis is."
But it's a different story elsewhere. "We're going great guns," said Bob Marquette, president of $1.5 billion members 1st FCU, located in central Pennsylvania, which has experienced 12% growth in the first half of the year and a strong 0.90% return-on-assets. "One of the reasons is, we've haven't seen the same kind of run-up in real estate values in our area."
It's the best of times and the worst of times for the movement-depending on what region you're in. In Montgomery, Alabama, where real estate prices have appreciated moderately, Max FCU has seen little of the troubles in other markets. The credit union has increased its deposits by $16 million since June. "We have to find a way now to make it stick until the economy turns around," Greg McClellan, president of the $725-million credit union told Credit Union Journal Max had a strong 1.01% ROA for the first six months of the year, enabled by low expense ratios. "We're very conservative. We have agencies (securitities). No mortgage backed securities," said McClellan.
But trouble is rearing it's head in some markets. "I don't think anyone's immune to it," said Tom White, CEO of $900 million Rockland FCU, in suburban Boston. The region, he said, has not been as badly overheated, as the last real estate crisis, in the late 1980's and early 1990s.
"It's different this time. There's not as much condo development; not a lot of investor-type stress," said White. "The problems I'm seeing now is we have members coming in and they have loans with Wells Fargo or Countrywide and we held the first lien. Now they're (the members) saying we hold too much debt." He said they're seeing a rise in delinquencies and charge-offs.
In Portland, Oregon, just north of the troubled California market, credit unions have had a healthy first half of the year. "We're not as heavily impacted," said Sam Launius, executive vice president at Oregonians FCU, "The Portland market has pretty much side-stepped a a lot of what they're experiencing (in California)." But, he said, the Orgeon market typically lags one or two years behind California. "There may be a trickle-down effect in the future. But is has not hit out members yet." (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/
