Lawmakers still hadn't approved the California budget at press time, even after an emergency Presidents' Day session that ran late into the night. As a result, Gov. Arnold Schwarzenegger's administration said it will halt the last of the state's public works projects and send out as many as 20,000 pink slips to state workers on Feb. 17.
Money is so tight the state has issued IOUs, or warrants, instead of tax refund checks this year.
Henry Wirz, president/CEO of the $1.4 billion SAFE Credit Union, said he's accepting California IOUs as member deposits at 100% value and is ready to assist furloughed and potentially laid-off workers; however, he said he hopes lawmakers find a budget solution instead.
"As you might imagine, there's some risk in [accepting warrants]," Wirz said. "Normal checks are submitted into the system within moments, so if there's a problem with that check, you know about it fairly quickly and can begin your security procedures."
The state probably won't start redeeming warrants for another 90 days or so, he said, so it could be months before SAFE realizes it's been a victim of fraud.
Wirz said state furloughs, which force workers to take two unpaid days off each month, are already affecting his members. The North Highlands, Calif.-based SAFE has a community charter that includes counties surrounding Sacramento.
"In this town, about 10% of the population is drawing a paycheck from the state, so if you impair that base, and add the multiplier effect, this would have a very Draconian effect on the Sacramento economy."
Schwarzenegger spokesman Aaron McLear told The Sacramento Bee that layoff notices would be delivered Feb. 17 to 20,000 of 100,000 state workers with the least seniority.
Wirz said regardless of the state budget, he's prepared for a tough 2009 and said California might not emerge from its economic slump until 2012.
According to financial performance reports posted on the NCUA Web site (www.ncua.gov), SAFE's delinquencies and charge-offs are true to trend, up exponentially over historical norms. Net charge-offs rose from 0.77% of average loans in December 2007 to 1.82% in December 2008. In a hint of what's to come in 2009, SAFE took a nearly $22 million loan-loss provision for 2008 year-end, wiping out noninterest income though the credit union ended the year with a $2 million net gain.
If the NCUSIF premium hike is defeated, Wirz said SAFE is budgeted for a positive return on assets this year, too.
"We don't see that we could make up the NCUSIF deposit premium hit, but assuming that doesn't happen, we can come out with positive net income this year, according to our budget plan," he said. "We'll go ahead and help these members, and we think they'll remain our loyal members for a long time to come."
--handerson@cutimes.com
Money is so tight the state has issued IOUs, or warrants, instead of tax refund checks this year.
Henry Wirz, president/CEO of the $1.4 billion SAFE Credit Union, said he's accepting California IOUs as member deposits at 100% value and is ready to assist furloughed and potentially laid-off workers; however, he said he hopes lawmakers find a budget solution instead.
"As you might imagine, there's some risk in [accepting warrants]," Wirz said. "Normal checks are submitted into the system within moments, so if there's a problem with that check, you know about it fairly quickly and can begin your security procedures."
The state probably won't start redeeming warrants for another 90 days or so, he said, so it could be months before SAFE realizes it's been a victim of fraud.
Wirz said state furloughs, which force workers to take two unpaid days off each month, are already affecting his members. The North Highlands, Calif.-based SAFE has a community charter that includes counties surrounding Sacramento.
"In this town, about 10% of the population is drawing a paycheck from the state, so if you impair that base, and add the multiplier effect, this would have a very Draconian effect on the Sacramento economy."
Schwarzenegger spokesman Aaron McLear told The Sacramento Bee that layoff notices would be delivered Feb. 17 to 20,000 of 100,000 state workers with the least seniority.
Wirz said regardless of the state budget, he's prepared for a tough 2009 and said California might not emerge from its economic slump until 2012.
According to financial performance reports posted on the NCUA Web site (www.ncua.gov), SAFE's delinquencies and charge-offs are true to trend, up exponentially over historical norms. Net charge-offs rose from 0.77% of average loans in December 2007 to 1.82% in December 2008. In a hint of what's to come in 2009, SAFE took a nearly $22 million loan-loss provision for 2008 year-end, wiping out noninterest income though the credit union ended the year with a $2 million net gain.
If the NCUSIF premium hike is defeated, Wirz said SAFE is budgeted for a positive return on assets this year, too.
"We don't see that we could make up the NCUSIF deposit premium hit, but assuming that doesn't happen, we can come out with positive net income this year, according to our budget plan," he said. "We'll go ahead and help these members, and we think they'll remain our loyal members for a long time to come."
--handerson@cutimes.com
