WASHINGTON — Sometimes ROA can move in cycles. For example, the $1.1 billion First Community Credit Union, headquartered in Chesterfield, Missouri, saw its ROA drop from .67% at the end of 2005 to .29% at the end of March 2006, a fact the credit union attributed to routine purchases of investments.

A First Community spokesman explained that the CU regularly purchases investments at the first quarter and that this purchase routinely drives down the ROA temporarily and then it bounces back. This year, for example, the spokesman pointed out that by the second quarter the ROA had gotten back to .63% again.

Some CUs temporarily see ROA higher because of higher loan reserves. The $1.9 billion Mission Federal Credit Union, headquartered in San Diego, saw its ROA drop to zero after it had to increase its reserve for loan losses. Anna Mendez, the CU's senior vice president for lending, said that the CU had increased its reserve for loan losses from $7.2 million to $14.4 million as a response to Centrix loans which were considered unstable even though the loans were performing well. This knocked the CU's ROA down, she noted, even though the loans were not delinquent and did not represent a loss.