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Thursday, Mar 28, 2024
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Despite a Slow Economy, SDCCU Makes Some Advances

San Diego County Credit Union, the largest in the county with $5.2 billion in assets, grew in profits, size and deposits for the first half, but its loan portfolio shrank.

At the half this year, net income was $37.9 million, compared with $20.6 million for the first half of 2010.

CEO Teresa Halleck said the higher profit was driven by lower loan losses this year, and reduced reserves for the problem loans.

Through the first half, SDCCU reported charging off $19.8 million in bad loans that it made. That compared with $30.4 million in charge-offs made through the end of the half in June 2010.

“It’s the cost of a sustained lack of a healthy economy,” said Halleck, who celebrates her first year on the job this month. “When you have people who lost their jobs and can’t hold onto their homes, then unfortunately you have to take the property back and sell it at a loss.”

As of the end of June, SDCCU held $5.4 million in foreclosed real estate on its books, up from $4.7 million in foreclosed property at the end of December.

As for delinquent loans, the total at the first half of this year was $62.3 million, compared with $74.8 million in mid-2010.

Those delinquencies include some loan modifications that are paying, and are small compared to the delinquencies held at many other credit unions in the state, said Halleck, who previously was CEO at Golden 1 Credit Union in Sacramento.

While SDCCU has grown in assets and deposits, enjoying gains from providing customers with better interest rates and picking up new business from mega banks, its total loans fell 7 percent to $3.16 billion from last year in June.

“Consumers continue to pull back,” she said. “There are some people buying homes and cars but it’s not robust.”

The record low mortgage rates have generated some refinancing and new home activity, Halleck said, but the demand for credit just isn’t too pronounced.

Thanks to its improved profit, SDCCU increased its net worth ratio in the second quarter to 11.92 percent of total assets, compared with 11.02 percent for the like quarter of 2010. Credit unions with net worth of more than 7 percent are considered well-capitalized.

The institution with 28 branches has about 600 employees, about the same number as one year earlier. “We’re always looking (for new branch sites),” Halleck said.

• • •

Return to Lending: For evidence that some banks are still lending, check out the most recent report from BofI Holding Inc., the parent firm of Bank of Internet USA.

For its fourth quarter that ended June 30, BofI’s loan portfolio hit a record $1.32 billion, up 71 percent from the like period of 2010, and up 19 percent from the end of March.

The Carmel Valley-based lender that does all its business online said in the most recent completed quarter it originated about $248 million in single-family and multifamily mortgages, up 63 percent from its third quarter, and up 653 percent from the originations in the like quarter of 2010.

BofI also purchased about $734 million in loans from other institutions. Assets for the bank increased 36.5 percent over the year to $1.94 billion, making BofI the region’s third largest locally based bank, behind only California Bank & Trust and Torrey Pines Bank.

As to net income, BofI did $5.46 million in the fourth quarter, compared with $4.6 million for the like quarter of 2010. For the full year, net income was down slightly to $20.2 million compared with $20.5 million for the prior fiscal year.

Nonperforming assets at the end of June were $19 million, or 0.99 percent of total assets, well below the norm, and down from the prior year when it was 1.01 percent of assets.

Because of its larger size, BofI’s capital ratios dipped, but were still above average. Total risk-based capital at June 30 was 13.01 percent compared with 15.25 percent at the like period of last year. To be well-capitalized banks must have at least 10 percent in that measure.

• • •

NCUA Sues Large Investment Banks: The National Credit Union Administration, the federal regulator to the 8,000 credit unions, sued Goldman Sachs, J.P. Morgan and RBS Securities, seeking nearly $2 billion in damages related to the failure of five wholesale credit unions.

NCUA alleges that the banks misrepresented the actual makeup of the bonds they sold to the wholesale credit unions earlier in the decade that eventually caused their failure. The wholesale credit unions provide the check processing and other back office services to smaller retail credit unions. As a result of the alleged tainted mortgages in the bonds, their value declined rapidly when the housing market imploded, and caused the failure of the credit unions, the lawsuits allege.

In a related legal matter, a federal judge dismissed the NCUA lawsuit against former directors of Western Corporate Federal Credit Union, who approved investing in mortgage-backed securities that eventually sank Wescorp. The group includes Robin Lentz, CEO of Cabrillo Credit Union who served on Wescorp’s board. However, the judge allowed the agency’s lawsuit to proceed against Wescorp’s officers, including CEO Robert Siravo and CFO Todd Lane, its former CFO who holds the same job with California Coast Credit Union.

Send any news about local financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.

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