LOS ANGELES – Credit unions throughout the Golden State are reporting improved mid-year financials, with several erasing big losses of the past two years and other troubled institutions less red ink, even as the NCUA’s second quarter assessment for the corporate credit union 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.
Kinecta FCU, which reported a huge $71.3 million loss last year, would have broken into the black for the first half of 2010 were it not for a $3.6 million NCUA charge, creating a $3 million loss for the period. Operating Engineers Local Union #3 FCU went from a $31.2 million loss for 2009 to a mid-year net of $1.2 million, even with a $760,000 charge. Schools Financial CU went from $9.2 million in the red to $1.2 million in the black, despite a $1.6 million charge. San Francisco FCU went from a $3.5 million 2009 loss to a $2.6 million first-half net, even with an $820,000 NCUA charge. And Farmers Insurance Group FCU went from an $18 million loss to a $340,000 net for the first half, despite a $750,000 charge.
“We’re seeing things start to settle,” said Daniel Penrod, economic analyst for 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,” Penrod told Credit Union Journal, of the state’s worst recession in decades.
To be sure, several credit unions 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 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 credit unions to reduce the reserves being moved to allowance for loan losses, which goes right to a credit union’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. “Credit unions are still looking to get money out to their members. The liquidity is there, the pool of funds is there. Demand seems to be returning,” Penrod stated.
