VICTORVILLE, Calif. — As The Members' Own FCU continues to make itself available on the credit union singles (merger) market, management is fighting to get out from under the weight of bad mortgage loans.
According to the CU's March 2009 5300 Report, mortgages accounted for $3.3 million of its $4.7 million in delinquencies — not surprising as it is in the heart of an area that saw the biggest run-up, and more recently the biggest crash, of housing prices in Southern California.
Mary Kassel, Members' Own's president and CEO, told Credit Union Journal the CU's net worth ratio of 1.32% (defined as "Critically Undercapitalized") is a product of several factors, including more than $3.2 million in allowance for loan losses, payments to stabilize the corporate network and a loss of its paid-in capital at WesCorp. "We took all of that in March, and it hurt," she said. "The corporate stabilization was about a 60 BP swing for us, and we are small."
In April, Members' Own, based here, put an unusual twist on a merger attempt by publicly announcing it was seeking a partner. The $89-million CU placed a letter to members on its website and sent a press release to the local newspaper.
Kassel said three credit unions have come to Victorville to look at Members' Own, but no offers have been made. While that dance continues, Kassel said Members' Own is pricing its OREOs "aggressively to sell." "We only have eight left [down from 16 in April]," she reported. "We still are doing loans, including real estate loans, because people are buying houses in the area as prices drop. We use Midwest Loan Services, who handles the underwriting, and it is through Fannie. While rates are down, things are going pretty well.
"There is some encouraging news out there," she added. "We are getting multiple offers on the homes we have for sale." The CU informed its members of its desire to identify a merger partner via a letter posted to its website on April 9.
Stats from Q1 2009 5300 Report:
- NCUSIF stabilization expense $550,021
- Net income (-) $4,210,678
- Net worth ratio 1.32 % "critically undercapitalized"
- Most delinquent mortgages: $3.3M of $4.7M
