Gregg Stockdale, president of Los Angeles-based Master Printers Section Credit Union, sees hard times for credit unions around him. Despite the, sour economy, Mr. Stockdale hasn't stopped lending. His $17.5 million-asset credit union has a loan-to-deposit ratio about 30 percentage points higher than average and an ROA of 1.6%.

Mr. Arndorfer, an American Banker reporter, spoke with Mr. Stockdale in Las Vegas at the convention for the National Association of State Chartered Credit Unions. Mr. Stockdale is chairman of the organization.

Q.: You have a 91% loan-to-deposit ratio. How do you keep it so high?

STOCKDALE: We took an attitude that we're loan driven, so we never paid overly high rates for deposits. Why should a credit union offer rates comparable to a failing savings and loan that needs depositors?

Q.: What's happened to lending at other institutions?

STOCKDALE: To the extent that credit unions were involved in real estate lending, they're biding their time because the equity on home loans has disappeared. There's not much new money going out on home loans; it's all in refis.

Some credit unions are strapped to make loans. That's why some are getting into non-traditional credit union lending techniques like indirect lending. When 50% of your assets aren't loaned out, you need to find a way to make loans.

Q.: How has the downturn in California affected credit unions?

STOCKDALE: A lot of credit unions, when their sponsors left, went to community charters. It always bothered me that if a sponsor moved, why didn't the credit union join them?

We serve open-shop printing companies. We've maintained a defined membership. But if somebody [a credit union] goes to a community charter, my members get calls. Some have stayed, some have left, some have left and come back.

Q.: What has been the bottomline impact of bankruptcy filings for California credit unions?

STOCKDALE: It's pretty severe. We're reviewing loans we've taken off the books due to bankruptcies, and I'd make them today. Looking at the loan application, there's no sign they were loading up on debt, nothing uncontrollable. But when some people run into trouble, instead of being the last resort, bankruptcy is the first resort.

If a husband and wife apply for a loan based on both of them working, and if the wife is terminated from work, they'll file for a full discharge.

Q.: What do you see as the role of the National Association of State Chartered Credit Unions?

STOCKDALE: Everywhere you go you're seeing smaller organizations that serve more select groups of people. We want to maintain the dual chartering system, the fact that credit unions have a choice in federal or state charters and the things that go along with that.

Q.: How have the roles of state regulators and the National Credit Union Administration changed?

STOCKDALE: In California, the Department of Corporations has kind of capitulated to NCUA. ... They're always deferring to NCUA for rules on something. That goes back to when deregulation kicked in. It used to be well-defined between the feds and states. Q.: What is the future of small credit unions?

STOCKDALE: I'm an optimist I think they'll always be there, depending on how well they serve members. A lot of people like belonging to a credit union that serves their particular identity. There's a bond there.

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