Slowing Economy May Be Seen In Mich. Data
LANSING, Mich.-The economic slowdown appears to have reached the credit union movement, at least in Michigan, where state chartered CUs are reporting a deterioration in earnings and capital and higher loan charge-offs.
State regulators reported that mid-year call reports submitted by Michigan's 282 state-chartered credit unions show 38 with mid-year net losses, double the number of 2001, with another 29 reporting weak return-on-average assets (ROAs) of 0.20% or less.
The annualized ROA for those state charters was just 0.78% at mid-year, the lowest in 14 years. At the same time, average net capital fell to 11.05% at June 30, the lowest since 1995. Net charge-offs continued to rise during the period, with 22 credit unions reporting charge-off rates of 1.5% or higher, double the number at mid-year 2001, and 25 reporting an increase of 100 basis points or more in their charge-off rates. Roger Little, deputy commissioner of the Office of Financial and Insurance Services, called on credit unions to develop a written plan of action to identify and address adverse trends. "The stresses evident in the June 2002 statistics highlight the need for application of sound management practices in an increasingly uncertain economic environment," said Little.
U.S. Central Reduces Dividends
OVERLAND PARK, Kan.-Lower market rates caused U.S. Central CU to reduce the dividends it paid its members in the first half of the year. The corporates' corporate reported Wednesday it paid combined dividends of $13.5 million on its Member Capital Shares (MCS) and Paid-In-Capital (PIC) for the first six months of the year, down 91% from the $25.8 million paid in the same period last year.
U.S. Central attributed the lower payout to decreases over the past year in the London Interbank Offered Rate (LIBOR) the interest-rate benchmark to which it ties its dividends. U.S. Central said net income for the second quarter declined to $15.2 million, from $16.2 million for the same period last year, though net income for the first half rose 27% to $34.1 million. The corporates' corporate also said it set aside a loss contingency of $2 million for potential losses it may have to realize when subleasing its current offices when it moves into its new headquarters in October.
Employees Spot Scam Attempt
KINGSTON, Ten. Collin Harker and Kelly Awald, both of Indiana, have been arrested after allegedly trying to cash a $2,000 check purportedly signed by Ricky Hendricks, who died in July in a tree-cutting accident. Employees of K-25 FCU spotted the scam because they knew Hendricks. Police arrested the duo in their trailer, where they found stolen checkbooks and two guns belonging to the late CU member.
Artist To Create Branch Mural
TILLAMOOK, Ore.-TCL FCU has hired Hollywood set artist Jo Lumpkin Brown to create a mural on the side of a branch depicting historic Astoria, including its original trolley station, which was located at the credit union site.