PEORIA, Ill.-Credit unions all over the country are braving the economic downturn and coping handily with the growing costs of the corporate credit union meltdown to post strong financials for 2009.
"Our members deserve a lot of credit for that," said Mark Spenny, president of CEFCU, which reported a 1.05 return-on-assets for last year, even after paying its members a $7-million bonus dividend.
Even with unemployment rising in the state, the core central Illinois market for the $4 billion credit union did not see the big run-up in real estate values and consequently did not see the rapid declines and resulting delinquencies, charge-offs and foreclosures.
Last year's success, $52.5 million in net income, before a $5.2 million charge for corporate credit unions, was enabled by strong mortgage refis and a solid growth in membership of 9,300 members and almost $400 million in new deposits, partly the result of the acquisition of the failed Valley CU. The deal, which put CEFCU into the lucrative Silicon Valley market, came at a discount, Spenny pointed out.
"Last year was one of the best years we've seen for membership growth," said Spenny. "Some of it is a reflection of a flight to safety, some of it a reflection of a flight to trust."
Other CUs are reporting strong financials for 2009, as well (see story, above right).
But credit unions in California, Nevada, Arizona and Florida continued to post big losses for the fourth quarter, even as some signs began to emerge that the economic slide was started to slow in the four so-called Sand States.
'Things Are Stabilizing'
"Things are stabilizing. That's the key in the Sand States, given that they were the hardest hit," said Daniel Penrod, an economic analyst for the California and Nevada CU leagues.
Still, credit unions from those states were posting big losses for 2009.
In California, Arrowhead Central CU reported a $46.3 million loss for 2009; North Island Financial CU a $40.3 million loss; Kern Schools FCU a $40.6 million loss; Xceed FCU an $18.5 million loss; Visterra CU a $10.5 million loss; Telesis Community CU a $9.7 million loss and Kinecta FCU a whopping $71.3 million loss for the year.
Nevada credit unions had not reported their financials at press time last week, but several were expected to report large losses.
The difference between the two states, according to Penrod, is economic indicators in California appear to be trending up. Unemployment appears to have leveled off, home prices are starting to recover and housing sales are picking up. The expiring tax break for first time homebuyers combined with near-record low rates and falling prices have boosted mortgage lending for the state's credit unions.
But Nevada has shown few signs of recovery, he said. "Nevada is still struggling, still trying to find a bottom," he said. The state has actually seen a net migration of residents because of the high unemployment, almost 13%, which has dealt a major blow to the state's credit unions, many of which are employee-based, he noted.
In Arizona, some of the largest credit unions continued to report red ink. Arizona FCU, which had a whopping $115 million loss for 2008, narrowed its loss to $29.5 million for 2009. Desert Schools FCU, the state's largest credit union, reported an $81.3 million loss. TruWest FCU reported an $8.2 million loss for the year.
Real Estate Rebound
In Florida, some real estate markets are also showing signs of having bottomed out, according to Fairwinds CU's Kathy Chonody. Real estate loans are performing better and prices are improving in many of the state's markets, she said. The trend has the $1.6 billion CU reserving less ALL, boosting its bottom line.
Still, some Florida credit unions continued to report big losses for the year. Tampa's Suncoast Schools FCU reported a $77 million loss for 2009; GTE FCU a $44 million loss; Grow Financial CU reported an $18.3 million loss and Community First CU of Florida in Lakeland an $8.3 million loss. Keys FCU, Key West, which has been run under NCUA conservatorship for six months, reported a $4.9 million loss for 2009.
