MANHATTAN BEACH, Calif. – Kinecta FCU said a mid-year loss of $10.2 million won’t deter it from expanding on last year’s acquisition of Nix Check Cashing – but will slow it down some.
“We entered 2008 knowing that our operating efficiency was going to be a little high for the year,” Karen Christensen, chief financial officer for Kinecta, said of last year’s unprecedented $45 million deal. “2008 is really our year of focusing on integrating the Nix purchase into our back-office operations.”
While the $4.4 billion credit union works to cut expenses, including the elimination of its troubled indirect used auto loan program, it's still maintains ambitious expansion plans that surround the massive 5 million-person field of membership expansion it obtained from NCUA in conjunction with the Nix deal.
In addition to the 53 Nix outlets Kinecta now operates separately out of a wholly owned CUSO, the credit union expanded its branch network to 25 from 19 over the past year and is piloting so-called mini-branches it plans to install in all 53 of the Nix outlets. “This is our way of reaching out to the undeserved banking community,” Christensen told The Credit Union Journal yesterday.
The Nix deal, she said, added to the credit union’s bottom line, but she would not quantify how much.
Christensen, a former Citi and Ameriquest banker who was hired by Kinecta at the end of first quarter, said with a 50% increase in loan loss reserves and the closure of the indirect loan program, as well as low delinquencies of just 57 basis points, the credit union is confident it has put the worst behind it.
Kinecta, she said, should benefit in the second half of the year by cost savings enacted in the first half, and by a widening of net interest margins.
Most of its single family mortgage loans are located in California’s coastal region, where declines in home price have been limited to just 5%, she added. Only 6% of its mortgages are in the Inland Empire, one of the hardest hit regions in the state. “That’s one of the reasons we feel we’re fairly well-positioned going forward,” she said.
