TUKWILA, Wash. – The recession has officially spread to the northwest, as evidence by the increasing delinquencies for consumer loans and a $9.3 million operating loss at BECU.
Add that to the $47.3 million of charges for BECU’s share of the corporate credit union bailout and $9.1 million for the loss of its capital in WesCorp FCU and you have a $65.7 million first quarter loss for the nation’s fourth largest credit union.
"It’s across the board," said Todd Pietzch, BECU spokesman, of the growing loan losses. "A small portion of it is mortgages, but mostly its home equity loans, Visa and auto. It’s spread fairly evenly."
"We’re not seeing it so much on first mortgages. This real estate market is not as hard-hit as other market," Pietzch told The Credit Union Journal.
The uptick on problem loans, attributed to an increase in the state’s unemployment, prompted BECU to add almost $25 million to loan loss reserves for the first quarter. "Our members are feeling a little bit of pain," said Pietzch, adding the credit union giant still projects to break even for the year. "Our underlying operations are still strong," he said.
The strained economy put even more pressure on the credit union’s bottom line, he noted, pushing capital down from an average of 8.5%, to just 6.9% at the end of the first quarter. Without the two big charges, net capital would have been 7.4%.
