Alaska credit unions led the country with 92% reporting positivereturn on average assets during the first quarter, according to theNCUA's Quarterly U.S. Map Review.

But even with a statewide average of 106 basis points of profitand 6.5% year-over-year loan growth, credit unions located in thelargest state report they are still coming up short on loans.

THE WHOLE PICTURE: See the NCUA Quarterly U.S. Map Review

The state's credit unions have plenty of money to lend and areintent on finding qualified borrowers. But they are experiencing alower demand than usual for consumer loans.

For the $129 million Spirit of Alaska Credit Union, whosemembers are professors, teachers, students and staff of learninginstitutions located north of the Alaska Range, loan growth wasaround 5% last year. That may sound good in the lower 48, but it'sa lower than usual number for that credit union.

“Alaska has had a boom-or-bust type economy for most of itshistory,” said Lynne Pohlman, vice president of human resources forthe Fairbanks credit union. “We are continuing to work toward amore stable business cycle. We're always a bit behind what's goingon in the lower 48, so we're feeling a slowdown and variousbusinesses are cutting staff. However, the housing market hasremained stable throughout the recession and continues to bestable.”

Spirit of Alaska reported a 0.81% ROAA during the first quarter,higher than the peer average of 0.59%, which Pohlman credited tointerest income, noninterest income and cutting expenses. Staff wascut by attrition, and Pohlman said the credit union raised somefees and instituted new fees. Member reaction to the new fees was anonevent, she said.

“We surveyed the local competition and remain about the middleof the market for fees,” Pohlman said.

The credit union also raised loan rates and tightenedunderwriting, thanks to increased NCUA examiner focus on troubleddebt restructuring loans.

“They require so much more documentation that this type of loanhas become very burdensome and time consuming,” Pohlman said aboutTDRs. As a result, Spirit of Alaska tightened underwritingstandards to avoid what it calls member assist loans.

The economic factors affecting members at Spirit of Alaska aresimilar to those facing all credit unions across the state: oilprices, mining activity and mineral prices, and military budgetissues. Although many Spirit of Alaska members are educators,layoffs in the sector are not as common as in the lower 48 becauseAlaska is in relatively sound financial health. But, that doesn'tmean everything is right with Alaska's economy. 

“If businesses continue to cut workers, there will be fewerchildren in the schools and layoffs will follow,” Pohlman said. “Wemonitor the current economic indicators very closely.”

Alaska's economy is more volatile than most of the other statesdue to its dependence upon the energy sector, but Alaska'sunemployment rate is one of the best in the nation at 6.9%,according to the most recent report from the U.S. Department ofLabor.

“The economy is a lot better off than what most Alaskans thinkit is,” said Scott Ambrose, a professor of economics at Universityof Alaska, Anchorage. “There's a lot of controversy over thestructure of Alaska oil taxes, which generate up to 90% of staterevenue, but the Alaska economy is stable and getting strongerevery month.”

A 2011 study by the University of Alaska and Northern Economicsexamining the economic impact of several producing oil fields inthe Arctic Ocean shows the state can expect to earn $162 millionannually if the trans-Alaska pipeline flows at full capacity. Thatmoney would come mostly from a lower tariff and additionalcorporate income taxes. The $5 billion Alaska USA Federal CreditUnion reported above-average ROAA at 1.15% during the firstquarter, with a delinquency rate of 1.2% and annualized loan growthof 6.44%.

“The loan growth is primarily from indirect auto loans, ourprimary loan product for the last 20 years,” said Dan McCue, seniorvice president, corporate administration. “Loan growth year overyear as of May 2012 was 10.9%. The strong auto loan growth isattributed to the recovery of the auto industry and Alaska USA'sexpansion of its dealer network in the markets it serves.”

Alaska USA FCU is the largest financial institution–bank orcredit union–in the state with 60 branches in Alaska, California and Washington state. AlaskaUSA entered the Washington market in 1983 through a merger.

Today, Alaska USA has 22 branches in western Washington whichhas led to strong growth in deposits, loans and membership, McCuesaid.

Alaska USA purchased five branches in southern California's HighDesert area and the deposit accounts assigned to them from the $715million Arrowhead Credit Union in June 2009, prior to Arrowhead'sconservatorship, to complement Alaska USA's existing branch networkin the region.

“The members in the High Desert region have assimilated wellwith the transition to Alaska USA,” McCue said. “This is reflectedin the consistent double digit grow for deposits and consumerloans.”

Alaska USA has recorded somewhat lower loan losses, loweraccruals for corporate stabilization expense and steady revenuefrom the credit union and its subsidiaries, McCue said. However,the credit union's delinquency ratio was 1.20% as of March 31, upfrom 1.01% one year prior.

McCue said the delinquency ratio had fallen to 1.13% as of May31, which is lower than the current peer average but higher thanhistorical norms.