Signs In California Are Pointing To Recovery
LOS ANGELES-CUs throughout the Golden State are reporting improved mid-year financials, even as NCUA's latest assessment for the corporate bailout weighs them down.
California CU, for example, which had a $30.1 million loss for 2009, moved into the black for the first six months except for a $1.2-million NCUA charge, creating a $670,000 loss. North Island Financial CU, which lost $52.4 million last year, moved into the black to the tune of $10.4 million, despite a $2.2-million NCUA charge. Patelco CU went from a $14.6 million 2009 loss to a $15.4 million mid-year net, even with a $4.4-million NCUA charge. "We're seeing things start to settle," said Daniel Penrod of the California CU League. "A lot of the issues are working their way through the system. We're starting to see some signs there is a light at the end of the tunnel."
Several CUs are continuing to report big losses. Kern Schools CU, which had a $40.6-million loss last year, reported a mid-year loss of $16 million. USA FCU reported an $11.7-million loss. Altura CU had a $7.6-million loss. Western FCU had a $5.8-million loss. But several signs are pointing to a recovery, according to Penrod. "Losses in some areas have been declining and we're seeing some positive growth-in spite of the assessments by NCUA, which will have a dampening affect for a while." The improving economy has led many CUs to reduce reserves for allowance for loan losses (ALL), which goes right to a CU's bottom line, he noted. "ALL has had a dramatic effect the last two, two-and-a-half years. The problem has been eating away at earnings," he said. "Now, it's not taking out as much of a chunk." Other signs include a rise in lending. "[CUs] are still looking to get money out to their members. The liquidity is there... Demand seems to be returning."