MANHATTAN BEACH, Calif. — Kinecta Federal Credit Union CEO Simone Lagomarsino said she doesn't regret spending some of her $4.5 billion credit union's capital to purchase Nix Check Cashing last summer, even in light of California's economic woes.
"I have no regrets at all," she said. "We believe we're in the right position for the longer term, and being able to serve the people who are underserved and unbanked, we're in absolutely the right position. And being right there in the community puts us in the right place given the economic times. I have no regrets, not even a hesitation."
Kinecta has experienced a rise in delinquencies this year, and even posted a net loss for the 1st quarter. Net worth to total assets fell from 9.29% to 8.44% when Nix was acquired during the 3rd quarter last year, and has settled to an even 8% for 1st quarter 2008.
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However, Lagomarsino said the delinquencies and losses have nothing to do with Nix; in fact, Nix-generated loans perform well and turn a profit.
Instead, Lagomarsino said, the credit union is experiencing the same net interest margin squeeze as everybody else, and economic conditions in Southern California are driving up delinquencies in consumer loan products. Though Kinecta's delinquencies compared to total loans have increased, it is still well below peer average.
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