California CUs: The Calm After the Storm
The Golden State’s credit unions may be nearing the end of their long journey to recovery. According to the California and Nevada Credit Union Leagues, California CUs made progress in 2011 in the areas of net income, net worth ratios, membership growth and loan performance.
Citing Callahan & Associates’ FirstLook Data and Analysis, the league said net income for California credit unions in fourth-quarter 2011 totaled $809.4 million, an increase from $558.3 million as of the end of 2010 and an even higher jump of nearly $1.4 billion from 2009’s net loss of $556 million. More than 250 of the state’s CUs reported positive net income in 2011, while around 150 reported net losses, the league said.
“Credit unions continue to struggle with their loan portfolios at a time when low interest rates leave little margin for accumulating retained earnings,” the league said. “The backlog of delinquent loans has declined, but existing loans continue to weigh heavily upon some credit unions that are working hard to strengthen net worth ratios.”
One California credit union that continues to see a light at the end of the tunnel is the $1.1 billion North Island Credit Union of San Diego, which reported a year-to-date net income of $11.92 million and net worth ratio of 6.43% in September 2011. The CU ended 2011 with a net income of $17.8 million, a net worth ratio of 7.3% and several service and product upgrades, including new ATMs, an Island Rewards MasterCard product and a new home equity line of credit.
Due to a slight economic improvement in California’s Inland Empire, where Riverside is located, Altura CU also managed to reduce its loan loss provisions from $35.6 million at the end of 2010 to $30.8 million at the end of 2011, the CU said.
Unfortunately, not every CU in California can report success going into 2012. The $1.1 billion, Brea, Calif.-based Evangelical Christian Credit Union made news when the Faith Center church in Rockford, Ill., which borrowed millions from the CU for an expansion project that launched in 2007, declared bankruptcy in January. According to reports in the Rockford Register Star, the Faith Center currently owes the CU $4.17 million.