Arizona CUs ROA Tops the Nation, but Numbers Mislead
Arizona credit unions reported the highest return on average assets in the country during first quarter 2012, according to the NCUA’s Quarterly U.S. Map Review. But despite 123 basis points worth of profit, things aren’t completely sunny in the Copper State.
Rather than increasing income, Arizona credit unions have achieved ROA thanks to a steep drop in provisions for loan losses. In March 2009, credit unions set aside 3.77% of average assets for provisioning, but that figure dropped to only 0.47% as of March 2012.
According to NCUA financial performance reports, operating expense to average assets has decreased among Arizona credit unions, from a high of 6% in March 2009, when ROA bottomed out at negative 4.16%, to just 4.08% in March 2012.
Dunham said the austerity measures at his Phoenix-based credit union included the shuttering of two branches, the elimination of shared branching for members, drastic cuts to his marketing budget, a four-year pay freeze and discontinued 401K contributions for employees.