PHOENIX-Desert Schools FCU, the state's largest credit union and which has been mired in red ink the past three years, is among the latest credit union giants to mark a return to the black for 2011.
The $3-billion credit union, which racked up $139 million in losses from 2008 through 2010, reported a healthy $23.3 million net for 2011, enabled by lower loan loss projections. Desert Schools also reduced its provision for loan losses-the amount of funds moved to its allowance for loans losses-by $54 million for the year. That combined with a 38% reduction in cost of funds helped overcome a 24% decline in loan income and left it in positive financial territory for the first time since 2007.
Several other troubled credit unions are reporting healthy nets as well, including San Diego's North Island Financial CU, which lost $103 million for 2008 and 2009. The $1.1-billion credit union reported its second annual net in a row, following up 2010's $11.5 million figure with a $17.8 million gain for 2011.
California's Altura CU, which lost $40 million from 2008 through 2010, reported an $8.4-million net for 2011. And California CU, which had a $35-million loss for 2009 and 2010, had a $6.4-million net for 2011.
Other big credit unions breaking back into the black for 2011 include Florida's Suncoast Schools FCU, California's Arrowhead Central CU, Utah's America First CU and Florida's GTE FCU.
Tun Wai, chief economist for NAFCU, attributed the strong earnings to a number of factors, including the lower provisions for loan losses, the lower cost of funds, cost-cutting, and a slight increase in loan demand. "Loan growth was negative; now, at least, it's positive," Wai told the Credit Union Journal.
And More Good News
Credit unions all around the country are reporting robust bottom lines for 2011, even after paying the $2 billion NCUA charge for the corporate credit union stabilization.New York's Hudson Valley FCU reported a 40% increase in net income for 2011 to $25.1 million. New Hampshire's Service CU increased its net in 2011 by 24% to $32 million. California's Stanford FCU reported a 46% surge in net income to $11.7 million. Alabama's Redstone FCU had a 69% rise in net to $31.2 million. Minnesota's Affinity Plus FCU had a tripling in net income to $11.7 million for 2011.
