PHOENIX – Large credit unions are reporting losses–big losses–for the first time, as the recession spreads through Arizona’s credit unions.
The red ink was topped by Arizona FCU, which reported a $64.4 million loss for the fourth quarter, creating a staggering $115.9 million loss for the year, the second biggest ever for a credit union.
The losses are spread throughout the Arizona Federal’s consumer loan portfolio, according to Ronald Westad, president of the $1.7 billion credit union. "Ninety-percent-plus is in auto loans, credit card loans and home equity," said Westad.
The spread of the problem loans is symbolic of the state’s economy, which has gone from second in the nation for job creation, to 47th, said Westad. "It’s more indicative of the general economy here," he told The Credit Union Journal.
He said they are attacking the losses by moving large sums into loan loss reserves, working out troubled loans with members, or charging them off when necessary. ""We’ve got plans and financial projections through 2009," he said. "We certainly a viable entity, based on those plans.
The credit union has $170 million in total capital, but just 4.75% net worth, below the minimum required under NCUA’s prompt corrective action rules.
Several other large Arizona credit unions, including the state’s biggest, $3.2 billion Desert Schools FCU, reported losses for the first time last year.
Desert Schools had a $7.5 million loss; Arizona Central CU had a $7.5 million loss; First CU a $11.7 million loss; Arizona State FCU a $5 million loss; Sunwest FCU a $4.9 million loss; TruWest FCU $4.4 million; Altier FCU $3.1 million; Tempe Schools FCU $3.2 million; Tucson Old Pueblo FCU a $3 million loss and Credit Union of the West $2.6 million.
