Washington credit unions took a hit to capital during thecorporate credit union and financial crisis like everyone else, butit hit them harder because they had lower aggregate capital tobegin with.

Thankfully, the aptly named Evergreen State credit unions alsohave ROAA that has remained higher than the national average tohelp rebuild net worth.

“ROA for Washington credit unions was – and always has been –higher than the national average,” said David Bennett, director ofpublic relations for the Northwest Credit Union Association. “However, because of theextremely high priority Washington credit unions place on the'return to members,' especially in the form of lower rates, higherreturns and better service, net worth is lower than average.”

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

According to NCUA financial performance reports, Washington'scredit unions closed 2007 with an aggregate 10.65% net worth and0.83% ROAA, compared with 11.40% aggregate net worth and 0.63% ROAAnationally. By December 2009, net worth among Washingtoncredit unions dropped to 9.16%, and ROAA had turned negative, witha statewide figure of -0.19%. Compare that with nationalnumbers, where credit unions also bottomed out on net worth with9.89% but had already recovered ROAA to a positive 0.18%.

As of March 2012, however, Washington credit unions are back ontrend, reporting lower net worth than credit unions nationally –9.40% in Washington compared with 10.01% nationwide – but alsohigher ROAA with 100 basis points in Washington State compared with 85 basispoints nationally.

The members of the $475 million Solarity Credit Union of Yakima,Wash. are still experiencing the after-effects of recession, suchas job losses and homes that are under water. However, the creditunion's ROAA mirrors the state's aggregate of 100 basis points, andPresident/CEO Mina Worthington said she's pleased with the currentstate of her credit union.

Solarity was rebranded earlier this year after the merger of the $285million Yakima Valley Credit Union and the $185 million CatholicCredit Union in fall 2011.

“Our ROAA is good because we control expenses and look toincrease sources of non-interest income,” Worthington said. “We arean agricultural community, so employment here is always a bitvolatile. This year, our farmers have done very well. Wehave not lost any major industries, and our credit union is tied tothe community as a whole and not to a select employer group. All in all, I'd say things are better than they were a few yearsago.”

Solarity's fee income has risen over the past year, from 0.63%of average assets as of June 2011 to 1.58% one year later.Operating expenses have remained close to peer averages, but loanyields have held steady while cost of funds have decreased,resulting in a rising net margin, from 3.86% of average assets asof June 30, 2011 to 5.22% as of June 30, 2012.

ROAA has responded accordingly, with the credit union reporting158 basis points of profit as of June 30, 2012, up from just 10basis points one year prior.

And, even though Solarity's delinquency rate of 2.29% as ofMarch 31 is much higher than the peer average of 1.34%, Worthingtonsaid she is nonetheless pleased with her loan quality because thedelinquency figure is inflated due to a few large commercial realestate loans. Solarity's charge off ratio of 0.15% during that sameperiod is far below peer averages of 0.68%.

Overall, Washington credit unions are reporting 1.3% delinquentloans to total loans as of March 31, slightly below the 1.4%nationwide rate, according to NCUA figures.

“Here in Washington between 2008 and 2010, average personalincome dropped from $42,791 to $40,920, adjusted to currentdollars,” said Bennett at the NWCUA. “This essentially wiped out adecade of hard-earned, middle class wage gains. In 2000, averagepersonal income was $41,000. Washingtonians still haven't recoveredthose lost wages.”

Washington's unemployment rate was close to the national averageduring the recession, and the state's July 2012 8.5% rate wasslightly higher than the national average of 8.3%, according to theBureau of Labor Statistics.

However, over the past two years more than 1,700 of the state'steachers were given layoff notices, according to the Center forEducation Data and Research at the University of Washington.

In Vancouver, Wash., iQCredit Union, with assets of $476 million, serves many of thosein education who lost their jobs, and it shows in the creditunion's 0.74% ROAA as of June 30.

“There are a lot of things that are bringing about this number,”said iQ President/CEO Roger Michaelis, “including school cutbacks,teacher retirements and budget shortfalls.”

Education job losses also have contributed to iQ'ssecond-quarter delinquency rate of 1.82%. Loan growth is alsostagnant, with the credit union reporting -1.88% as of June 30.Washington state credit unions are averaging 2.5% 12-month loangrowth as of March 31, according to the NCUA.

Michaelis said auto loans and member business lending are doingwell, and the credit union has been funding a few 10- and 15-yearmortgage loans.

“That seems to be a bit of good news,” he said.

In Seattle, the $10 million Express Credit Union, a designatedLow-Income Credit Union and Community Development FinancialInstitution, reported -3.09% ROAA as of June 30, which reflects thecredit union's field of membership, said CEO Sharon Hall.

Express partners with social service agencies and communityorganizations to provide products and services through fee-freeCO-OP ATMs and Community Member Service Representatives, who visitsocial services locations on a rotating, pre-scheduled basis. Thesetraveling employees use their secured laptops to provide cashlessservices and financial education to low income people in their ownneighborhoods. They also help members learn to budget, cleanup their credit and check systems reports, and learn to navigatethe financial services industry.

“This is a very expensive program,” Hall said. “Serving theunderserved is not profitable, and that is why no one wants to doit. We are in our third year on this new model and are stillreally working out the kinks.”

Express also depends upon Treasury grants that aren'tdistributed until the fourth quarter of each year.

“We dip in the first three quarters and then spring back up byyear end,” Hall said. “However, it is our goal to besustainable without outside support and only using our ownnonprofit for support.”

There's a demand for the services, however, which is reflectedin the credit union's 17.24% 12-month loan growth as of June 30.Delinquencies are actually lower than the state average, withExpress reporting 0.86% compared with Washington's aggregate 1.4%during the same period. However, charge offs are higher, withExpress reporting 1.56% nearly double the statewide average of0.78% of average loans.

“What you will find interesting is that our low income targetmarket members' numbers are doing quite well,” Hallsaid. “Opposite than what the industry would expect. When you give people a second chance and allow them access toeducation, they pay back their loans and grow their savings.”