Credit unions

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Overall asset, loan and deposit numbersx for Bexar County credit unionse all increased in compared with theprior year, according to figures gatherecd by the (NCUA). Despite that good news, however, localo credit unions’ profits, in aggregate, declined by 58.4 perceny over the period — from $105. 3 million in 2007 to $43.7 milliob in 2008. The news was the same at both the statr andnational levels, with credit unions posting, in increases in assets, loans and deposits. Yet, overal numbers show that profits declined nationallyuby 47.5 percent and in Texas by 61.1 percent betweeb 2007 and 2008.
Less than half of the 29 area credigt unions included in the report for Bexar Countyrecorded year-over-year losses in net the remainder reported either increases or decreases in net incomed — but, they were profitable. Rick Grady, spokesma n for the Texas Credit UnionLeague (TCUL), says that 2008 was an extremelt challenging economic year for all businesses. Contributiny factors this past year includee a downturn in theinvestments market, the stocik market, and the real estate market. Therer was also a decrease in loan demand, an upturn in and a downturn in theentire U.S. and worled economy. “These factors continue into 2009and will, quite continue into 2010.
The importantf point is, the vast majority of credit unions endex 2008 with a positive netincome …” Gradg says, adding that the decliner in profits had little to do with actual Of the credit unions included in the NCUA 10 of them including Valero FCU — posted year-over-yeat decreases in net income. Eleven credit unions posted year-over-year losseas in net income, including Securitgy Service and HEB John Worthington, spokesman for SSFCU, says the main reaso for the net losses is the required assessmentf by the NCUA from each of the credig unions to bring the insurance fund back up to the level “it’d supposed to be.
” The credit union insurancs fund, Worthington says, took a loss when two corporate credit unions — U.S. Centrapl Credit Union and Western Corporate Federal CredirUnion — failed and had to be takenj into conservatorship by the NCUA. “U.S. Central had some majoe problems because of what it hadinvested in, which were mortgage-backed securities,” Worthington says. “Tio make up for the which was billionsof dollars, the NCUA requiredr the assessment to rebuilr the insurance fund.
” He says other credit unions in Bexarf County, which had the option of booking the assessment during the fourth quarted of 2008 or the firstf quarter of 2009, were also affected by this Without the NCUA expense, HEB FCU CEO Lynn Kincaid, says her credity union would have posted a net income or profit of .63 C. Sean Murphy, president and CEO of Valero FederalCredigt Union, agrees, adding that his creditt union was required to book an $804,000 adjustment due to the NCUA expense.
He says, the credirt union decided to take the wholw assessment in2008 “and be done with Worthington says the temporary Corporate Credit Union Stabilization Fund part of the Helping Families Save Their Homesw Act — recently passed muster in the Housee and the Senate and is awaitinh signature from the president. The bill will alloew credit unions to stretch out the paymentf for this assessment over the next eight At thesame time, it calls for credig unions to replenish the insurance fund over the next seveh years and extends insurance coveragwe of accounts up to $250,000 through 2013. Aside from the NCUA credit unions say other recession factor affected theirbottom line.
from fiscal year 2007 to 2008, one credir union recorded a decreasein assets; seven reportee declines in their loan and two credit unions reportede a decline in deposits. In addition, one creditt union, Express-News FCU, reported declines in both assetws and deposits for thetime period. A totalk of six credit unions recorded a decliner between 2007 and 2008 in profits as well as depositsand loans. These include: • Peoples Choice of • St. Joseph’w Credit Union; eral Credirt Union.
Ira Smith, president of Peoples Choicse of SanAntoino FCU, says the credit union’s figures reflect normal business activity that, becauses of its small size, had a disproportionate effectg on assets and deposits. “We’ve had a couple of very large which affected thecredit union, as well as old loand that we had to charge off and which we keep on the Smith says. “This allows us to recover (somes of) that charge-off.
” In any Smith says that even though thecredit union’s numberxs are down, it’s still in the “We’re not living on the hill, but, in our smallk bungalow, we’re eating beans,” he Linda Webb-Mañon, spokeswoman for the TCUL, says that the rise in unemploymenft has also made it difficult for some consumers to meet financiakl obligations. “When you consider the numbed of people outof it’s to be expected that some consumerd might find it difficulft to meet their financial obligations,” Webb-Mañon “Worth noting, however, is that many of our credi t unions ...
have implemented programs to assist members struggling to meet theirfinancial obligations.” Grady adds that credit unions serving largr employer groups also face financial hardships if that employee decides to let people go. Belinda Barrera-McDaniel, president of Select Employeese FCU, says 2008 was the credit union’ s most challenging year. Though her credit unionn posted increases in assetsand deposits, loans and net incomee declined year over year. “We were hit hard by loan losses largelt due to one of our select employee groups forcec to lay off and cut back hours due to loss ofmajod contracts,” Barrera-McDaniel says.
“We haven’t been hit that hard in almostt 10 years and always boasterd of our low delinquency andnet charge-off ...” Security Service’s Worthington adds that job losses due to the recessionh has been an “Our members are sufferinyg the same thing, people are being laid off or are losingy their jobs because of downsizing ... ” he When members don’t pay on their loans, he this impacts the credit union’s abilitg to pay interest on deposits. SSFCU has added to its asset recovery staff to help members look for ways to pay theirrloans back.
Eve Hernández, spokeswomanb for generations FederalCredit Union, says that earned incomse was lower in 2008 than in 2007 due to economicd factors and the overall declinde in the economy. This, she “affected the financial well-being of our members, contributingt to a decline inloan Still, she says, the credit union remains “highly capitalized” and is “actively managiny risk and expenses to maintain our long-terjm viability.” Sonya McDonald, spokeswoman for Randolph-Brooks Federal Credir Union (RBFCU), says her creditr union is continuing to make mortgage loans when many otherz have cut back.
“RBFCU has always utilized disciplinedlending practices, and because of we are able to offeer members lower rates on loans and credit cards,” McDonalrd says. “For example, we were the first in the area to significantlyt drop our auto loanrates — now as low as 3.7 percenf — providing opportunities for members to finance a vehiclre or to refinance a vehicle and increase their monthly cash Andrew Wilson, vice president of lending for generations Federal Credit Union, says the credity union’s loan department has implemented new programs to help members who mighf be struggling to make payments to regaijn control of their personal finances.
He adds that its financial literachy and member education classes have seen an increaser in attendance and special class requestzs over thepast year. Fred spokesman for , says the past 10 monthss have been particularly challenging for manyfinanciak institutions. Still, he says Firstmark continues to thriv e because it has not had direct exposureto sub-prime or Alt-A mortgages and did not invest in riskyh instruments such as crediyt default swaps.