Deteriorating real estate conditions in the Sun Belt are leading to record losses at some of the nation's largest credit unions.
The $3.2 billion-asset Desert Schools Federal Credit Union in Phoenix said this week that it swung to a loss of $7.5 million in 2008 from a profit of $29.5 million in 2007.
It was the credit union's first yearly loss in its history.
The $1.6 billion-asset Arizona Federal Credit Union, also of Phoenix, said it lost a whopping $64.4 million in the fourth quarter and $115.9 million for the year. It is one of the largest one-year losses ever for a credit union.
Losses are also piling up at credit unions in states such as Florida and California.
Florida's largest credit union, the $6 billion-asset Suncoast Schools Federal Credit Union in Tampa, reported a $25 million loss for the fourth quarter, bringing its losses for the year to $76.7 million.
And the $3.4 billion-asset Wescom Central Credit Union in Pasadena, Calif., said it lost $21 million in the fourth quarter and $53 million for the year.
Arizona Federal, Suncoast, and Wescom are among 10 credit unions targeted by the National Credit Union Administration for special attention by an examination task force the agency created last month. The team, made up of a director, five problem case officers, and a loss risk analysis officer, is focusing on large credit unions in devastated real estate markets that have reported losses for several consecutive quarters.
Others on the special examination roster include the $1.8 billion-asset Eastern Florida Financial Credit Union in Miramar, which reported a loss of $40.2 million for the year, and the $4.2 billion-asset Kinecta Federal Credit Union in Manhattan Beach, Calif., which said this week that it lost $21 million in the fourth quarter and $44.3 million for the year.
California's largest credit union, the $8 billion-asset SchoolsFirst Federal Credit Union in Santa Ana, said this week that it lost $2.4 million last year. Also, the $1.8 billion-asset Kern Schools Federal Credit Union in Bakersfield, Calif., reported a loss of $24.3 million for the year, and the $1.6 billion-asset North Island Financial Credit Union in Chula Vista, Calif., said it lost $50.2 million for the year, with $32.5 million of that loss coming in the fourth quarter.
Jack Lewis, the chairman of North Island's board, said Tuesday that the credit union's problems "are a reflection of the hard-hit real estate market in Southern California."
The $1.6 billion-asset North Island set aside an additional $31 million in loan-loss reserves in the fourth quarter and cut expenses by about 21%, to about $12 million. The expense cuts included the elimination of about 50 jobs, or 10% of its work force, according to Geri Dillingham, the chief operating officer.
Also this week, the $1.8 billion-asset Texans Credit Union in Richardson said it lost $33.5 million for the year; the $2 billion-asset GTE Federal Credit Union in Tampa reported a $27.5 million loss for the year; and the $2.7 million-asset Mountain America Credit Union in West Jordan, Utah, said it lost $22.5 million.
