The biggest loser in the fourth quarter was Wescom CU, the $4 billion Pasadena, Calif., credit union which boosted its loan loss reserves by $24.3 million, or 68%, causing losses of $26.3 million for the quarter and a whopping $33.2 million for the year.
Several other large California credit unions, where the mortgage market has been hit harder than most states, also reported huge losses for 2007, like USA FCU, a loss of $5.8 million; Sterlent CU, $4.8 million: Kaiperm FCU, $3.8 million: Xerox FCU, $3.4 million: E1 Financial CU, $1.4 million and Kaiser Lakeside CU, $1.4 million.
The red ink was spread around the country. Credit Union of Texas, the biggest player in failed subprime auto lender Centrix Financial, reported a $5.8 million loss for the fourth quarter, and a $13.7 million loss for the year. Centris FCU lost $6 million for 2007: Alabama Central CU lost $5.7 million: Capital Community CU, in Grand Rapids, Mich., lost $8.8 million: CommunityAmerica CU lost $6.8 million: Allco CU $6 million: Peoples First Choice FCU of New Jersey lost $5 million: U.S. Alliance FCU in Denver lost $3.5 million: Bay Gulf CU in Tampa, Fla., reported a $3.1 million annual loss, and Allegacy FCU, in Winston-Salem, N.C., reported an $8 million loss.
That doesn’t include some of the biggest losers who have been liquidated by NCUA and merged out of existence, including Huron River Area FCU, which had a $59 million loss for the first three quarters of the year: Cal State 9 CU, which lost $46 million for the first three quarters, and Norlarco CU, which lost $13.1 million, and is in the process of being liquidated.
Dozens more credit unions reported losses of $1 million or more in 2007. Most of the credit unions are operationally sound but represent additional allowance for loan losses, which must be taken from the bottom line under normal accounting rules.
So Alleghacy FCU tripled the amount of its reserves, adding an additional $11 million, thus pushing the $1 billion credit union into the red. Many other healthy credit unions were hit by the same requirement but were able to remain in the black. Suncoast Schools FCU, for example, reported a 95% decline in net income, from $56.5 million in 2006 to just $1.9 million in 2007, after adding $45 million to its loan loss reserves. (CU Journal)