SAN FRANCISCO – Giant Patelco CU, which is in the process of absorbing two large credit union failures, is the la test credit union in this troubled market to report large losses, reporting $40.2 million of red ink for 2008.
The $4.1 billion credit union joins several other of the Golden State’s biggest credit unions in reporting losses for the year: Wescom Central CU, a $50.2 million loss; Kinecta FCU, a $44.3 million loss; North Island Financial CU, a loss of $40.2 million; Arrowhead Central CU, a $26 million loss; Kern Schools FCU, a loss of $24.3 million; California Coast CU, a $23.8 million loss; Travis CU, a $23.8 million loss; LBS Financial FCU, a loss of $11.8 million; Visterra CU, a $9.1 million loss; Alliance FCU, a $7.1 million loss; and SchoolsFirst FCU, a loss of $2.4 million.
Andrew Hunter, president of CEO of Patelco, said Friday that costs to integrate the acquisition of failures Cal State 9 CU and Sterlent CU, about $4 million, were only minor contributors to the 2008 losses. "More significant was that we had a higher rate of loan losses this year than we’ve had in previous years," Hunter told The Credit Union Journal. While mortgages made up a large part of the losses, the losses are starting to ripple through Patelco’s auto and credit card portfolios, he added.
A doubling in the credit union’s delinquency ratio to 2% last year and a more than doubling of charge-offs to $97 million, from $35 million in 2007, forced Patelco to boost loan loss reserves by $17 million in the fourth quarter. "Parts of the Bay Area have reall y been hit hard," said Hunter, who is preparing to retire, after 28 years at Patelco, the last seven as president, as soon as the board names a successor.
As a result of the economy, Patelco, always known for its take-no-prisoners growth, has had to reign in expenses, which has included one branch closure and the possibility of others, according to Hunter. In addition, they are exploring some asset sales and have lowered CD rates in order to reduce cost of funds. But, he stressed they do not want to retrench too much because of the possibility it would hamper them in a recovery.
"Even though we’re going through difficult times, we’re still confident about our credit union, our members and our community," said Hunter.
