More than two months after Kyle Markland suddenly resigned aspresident/CEO of Affinity Plus Federal Credit Union, thecooperative's third quarter financials reveal continued decreasesin income.

On Aug. 28, Markland left Affinity Plus' top post after 16 years of serviceat the $1.7 billion credit union in St. Paul, Minn. According toDave Larson, who was named interim CEO shortly after theannouncement, Markland's departure was prompted by an empty nestand the former executive's desire to evaluate his future.

At the time of Markland's resignation, Affinity Plus reported a0.57% return on assets as of June 30, according to its financial performance reports posted on the NCUA website. Inthe third quarter, ROA dropped to 0.25%. Comparatively, in June2012, the credit union reported 1.45% ROA.

Affinity Plus' third quarter financials reveal financialmanagement strategy shifts that resulted in a 55.1% annualized dropin net income as of Sept. 30. Net income dropped from $4.6 millionas of June 30 to $3.1 million as of Sept. 30.

Driving the income drain was a 12.7% increase in provision forloan and lease losses after delinquent loans increased 23.5% to$16.5 million in the third quarter. However, as delinquenciesincreased, the credit union's charge off ratio dropped five basispoints, resulting in an aggregate 11 basis points slide in AffinityPlus' loan quality index.

The credit union also reported nearly $1 million innon-operating expense during the third quarter, further depressingnet income.

On the asset side of the balance sheet, cash decreased to $61.5million as of Sept. 30, down from $70 million as of June 30 andnearly $102 million during the third quarter of 2012. Investmentsalso decreased to just under $6 million as of Sept. 30, down frommore than $29 million the previous quarter.

Affinity Plus, which reported a 99.32% loan-to-share ratio inthe third quarter, also reported $64.4 million in loans held forsale, up dramatically from $27.2 in the second quarter and $13.56million one year prior. Third quarter numbers also reportedincreases in outstanding balances of all major lending categoriesand total loans outstanding of $1.54 billion.

New on the balance sheet was a $45 million note that drasticallyincreased total liabilities for the third quarter.

Affinity Plus' net worth dropped to 7.52%, lower than the 7.93%net worth reported in the second quarter. During that period, theaverage ratio for the credit union's peer group was 10.44%.However, the 7.52% does not represent a long-term slide in networth, as the credit union has managed net worth between 7% and 8%for a number of years.

Affinity Plus did not respond to a request for comment on itslatest financials.

In its 2013 Fall Member Focus newsletter, Larson wrotethe credit union is a healthy and financially strong organization.He also said Markland “was instrumental in building thisorganization that stands for people before profits.”

“(It) is because of him that we operate in a business model thatputs you first in everything we do,” Larson wrote. “Fortunately,his departure does not change who Affinity Plus is, why we arehere, and what you can expect to experience. It's very simple—youare the reason why we're here.”

Chartered in 1930 as State Capitol Credit Union to serve thoseworking in St. Paul, the cooperative changed its name to AffinityPlus Federal Credit Union in 1998 to better reflect its broaderservice area, according to its website. It now has 25 branchesthroughout Minnesota and serves more than 167,000 members.

Markland was 33 years old when he took the helm of Affinity Plusin December 1997. When Credit Union Times interviewed himlast year upon receiving the publication's 2012 Trailblazer CEO of the Year award, he said the board tooka chance on hiring someone so young of what was then a $357 millionfinancial institution.

During his tenure, membership grew from 70,000 to more than167,000 members and assets hit $2.8 billion in March 2012. He was astaunch critic of the Durbin Amendment that capped fees on mostdebit card swipes and voiced his concerns in a comment letter toSen. Richard Durbin (D-Ill.).

Markland touted the credit union's strong loan programsincluding mortgages which topped the $725 million mark in 2011 at atime when other credit unions were struggling to build theirportfolios, he said last year.

Affinity's Plus “Ditch Your Bank” campaign started well beforeBank Transfer Day in November 2011, he noted. The campaigncontinues to this date, according to the credit union'swebsite.