Centrix Loans Can Have Big Effect on CU ROAs, But ROA Swings Can be Tied to Many Things
WASHINGTON -- Sometimes ROA can move in cycles. For example, the $1.1 billion First Community Credit Union, headquartered in Chesterfield, Missouri, saw its ROA drop from .67% at the end of 2005 to .29% at the end of March 2006, a fact the credit union attributed to routine purchases of investments.
A First Community spokesman explained that the CU regularly purchases investments at the first quarter and that this purchase routinely drives down the ROA temporarily and then it bounces back. This year, for example, the spokesman pointed out that by the second quarter the ROA had gotten back to .63% again.