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Monday, November 10, 2008

OnPoint update reflects continued hard times

We continue our series of quarterly snapshots of the operating results at OnPoint Community Credit Union -- a barometer of the economic times in Portland's neighborhoods. As might be expected, the third quarter (ended September 30) was pretty rough, and of course, that's before Black October set in.

The financials show ever more loan delinquency, and other investments that are losing value as well. The whole sad story, as officially reported to the National Credit Union Administration, is in this Excel file. Here are the numbers that we've been following with our untrained eye over the past year:

Item9/30/076/30/089/30/08Quarterly increase (decrease)12-month increase (decrease)
Total investments$239,660,803$298,019,625$246,342,512(17.34%)2.79%
Federal agency securities$97,766,028$153,595,595$140,786,482(8.34%)44.00%
Total reportable delinquency - total delinquent loans$3,525,641$9,944,789$14,302,88443.82%305.68%
Total reportable delinquency - indirect lending$1,659,211$3,736,341$977,090(73.85%)(41.11%)
Total outstanding loan balances subject to bankruptcies$4,595,702$6,218,843$9,979,22060.47%117.14%
Ratio of delinquent loans to total loans (percent)0.170.450.63    
Ratio of total delinquent loans to net worth (percent)1.564.095.74   

Delinquent loans are those delinquent for two months or more.

Year-to-date net income for the quarter ended September 30 was $16,329,466, down 18.12% from the same quarter last year ($19,943,990). For the second straight quarter, deposits fell, from $2,278,482,461 to $2,221,206,727 -- a 2.51% drop. Deposits a year earlier were $2,236,379,220, and thus for the year deposits fell 0.68%.

Comments (6)

I'm pretty sure they use accrual accounting. So how do they reflect delinquent interest? Is it accrued as income, as if it had been paid, when it hasn't?

Commercial banks move classified loans or those 60 days or more delinquent to "non-accrual" status thus stopping the calculation of earned interest. I would think credit unions have the same policy.

The good(Bad) thing at least is that the investments (loans I take it) have dropped by 17% in a quarter. Plus with WaMu collapsing, they must have a ton of new investments.

Other thing - Looks like they have been buying T-bills for return instead of making loans.

In addition to their loan problems, they aren't exactly savings friendly either. Their rates for savings are so low that we've move a huge amount of money and spread it amongst three stronger banks (all internet based - ING, Emigrant Direct, and HSBC) to be earning an average of 3.25% without having to tie up money for any fixed length of time. It completely accessible via a transfer request from the bank to Onpoint. Onpoint is losing a huge opportunity to repatriate funds if they would increase their niggardly saving rate. Their market rate funds pay less than 2%. I can do better at a dozen local banks and credit unions. The moment Onpoint took over, the rates on their savings account dropped to the levels seen in commercial banks. Pitiful.

We're people who don't need to borrow money but would happily supply capital to those who do, but we expect some return on investment. Onpoint doesn't do it for us.

"The moment Onpoint took over, the rates on their savings account dropped to the levels seen in commercial banks."

That's the point, I am FirstTech and they have so many new deposits, they are having a hard loaning it out at any kind of reasonable return in a conservative investment.

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