Credit Union Earnings Improve Overall in Q2

One credit union, U.S. Eagle of Albuquerque, N.M. ($ 1.5 billion in assets, 96,315 members) lost $18.2 million (-4.88%) in the second quarter after losing $2.4 million (-0.63%) in the previous quarter. Its net worth ratio was 9.10% June 30, down from 10.50% Dec. 31 and down from 10.16% at March 31.

The other credit union, Civic Federal Credit Union of Raleigh, N.C. ($ 3.7 billion in assets, 380,898 members), lost $14.4 million (-1.51%) in the second quarter after losing $10.4 million (-1.04%) in the previous quarter. Its net worth ratio was 9.11% June 30, up from 9.10% Dec. 31 and up from 8.95% at March 31.

The credit unions in Callahan’s database as of Monday earned $4.95 billion in the three months ending June 30, or an annualized return of 0.83% of average assets. That was up from $3.94 billion (0.67% ROA) in the first quarter. Their results closely mirrored the Top 10 credit unions, whose ROA was 0.84% in the second quarter — not much different from the previous quarters with the huge exception of last year’s fourth quarter when credit unions significantly increased their provisions for loan losses.

On the other hand, there was an increase in the number of credit unions that had net reductions of full-time equivalent jobs from March 31 to June 30. In the first quarter there were two. In the second quarter there were five:

• Georgia’s Own Credit Union of Atlanta ($4.3 billion in assets, 241,295 members) had 536 FTEs on June 30, down 142 (-20.9%) from three months earlier, and down 141 (-20.8%) from a year earlier. It earned $6.3 million (0.59% ROA) in the second quarter after earning $6.1 million (0.58%) in the first quarter. Its net worth ratio was 10.48% June 30, down from 10.94% a year earlier and up from 10.43% three months earlier.
• Connexus Credit Union of Wausau, Wis. ($3.9 billion in assets, 456,712 members) had 613 FTEs on June 30, down 75 (-10.8%) from three months earlier, and down 121 (-16.5%) from a year earlier. It earned $280,470 (0.03%) in the second quarter after losing $13.8 million (-1.3%) in the first quarter. Its net worth ratio was 7.90% June 30, down from 9.04% a year earlier and up from 7.32% three months earlier.
• State Employees’ Credit Union of Raleigh, N.C. ($ 56.2 billion in assets, 2.9 million members) had 8,013 FTEs on June 30, down 92 (-1.1%) from three months earlier, and up 73 (0.90%) from a year earlier. It earned $136.3 million (0.98%) in the second quarter after earning $44.7 million (0.33%) in the first quarter. Its net worth ratio was 10.06% June 30, up from 9.53% a year earlier and up from 9.99% three months earlier.
• GECU Federal Credit Union of El Paso, Texas ($4.4 billion in assets, 435,429 members) had 861 FTEs on June 30, down 51 (-5.5%) from three months earlier, and down 71 (-7.6%) from a year earlier. It earned $14.5 million (1.31%) in the second quarter after earning $13.6 million (1.24%) in the first quarter. Its net worth ratio was 12.81% June 30, up from 11.86% a year earlier and up from 12.48% three months earlier.
• Michigan State University Federal Credit Union ($8.2 billion in assets, 381,844 members) had 1,375 FTEs on June 30, down 62 (-4.3%) from three months earlier, and up five (+0.3%) from a year earlier. It earned $5.7 million (+0.28%) in the second quarter after losing $1.5 million (-0.07%) in the first quarter. Its net worth ratio was 8.34% June 30, down from 8.91% a year earlier and up from 8.27% three months earlier.

Total full-time equivalents from Callahan’s preliminary data indicated a gain close to 2% from December to March and up about 4% from a year earlier. First-quarter FTEs were also up 4% from a year earlier.

But those with big losses or cutting back on jobs reflected some of the changes and stresses in the movement.

U.S. Eagle attributed an $18.4 million loss to deteriorating loan performance. It charged off a net of $10.4 million in loans of all types in the three months ending June 30, a net charge-off ratio of 1.20%, compared with 0.75% for all credit unions in the second quarter. Its delinquency rate was 1.05% June 30, up from 0.84% a year earlier.

Southwest Capital Bank CEO Chez Steel told the Albuquerque Journal that recent losses at the credit union contributed to the collapse a deal for the credit union to buy the $1.5 billion bank.

Civic has been spending heavily and taking losses as it expands from a virtual credit union to one with a network of branches throughout North Carolina.

Dave Preter, president/CEO of Georgia’s Own, said fewer in-person transactions and overlap created by a recent merger led the credit union to cut jobs in April.

“Today, 77% of our transactions occur through self-service channels,” Preter said. “In response, we restructured the organization to better meet the evolving needs of our members. As part of this effort, the credit union offered voluntary retirement and voluntary separation opportunities. All employees impacted by our organizational changes received an above-market severance package and outplacement support to assist with their career transitions.”

“At this time, we do not anticipate additional reductions,” he said.

Connexus’ second-quarter gain followed a series of recent losses, which led the credit union to adopt a plan early this year to return to profitability. The plan emphasized “investing in risk mitigation disciplines, controlling operating expenses and leveraging diverse revenue opportunities.” It had said its losses were caused by slower loan growth, a higher cost of funds and rising delinquencies.

As of June 30, 1.83% of Connexus’ loans were 60 days or more past due, unchanged from March 31, but down from 2.81% a year earlier.

Laura Huggins, Connexus’ SVP of marketing, said the credit union made “organizational changes” in the second quarter “in alignment with our operating plan and strategic priorities.”

“These adjustments reflect our commitment to aligning operations with the evolving needs of our member-owners and ensuring the financial cooperative remains strong and responsive amid economic challenges,” Huggins said.

Contact Jim DuPlessis at JDuPlessis@cutimes.com.