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Thursday, May 7, 2009

OnPoint Credit Union fourth quarter was loss, not profit

For a while now, we have been taking a series of quarterly snapshots of the operating results at OnPoint Community Credit Union -- as a barometer of the economic times in Portland's neighborhoods. As one might expect, over the past year, things have not been so rosy.

But the latest news from the green-eyeshade set is of a little different kind. We recently opened up the credit union's March 31 financial report filed with the National Credit Union Administration, to see what went down in the first quarter of 2009. That report is in this Excel file. As we plotted the progress of the recession in the figures, we noticed that the numbers for the fourth quarter of 2008 have been changed, and not for the better, from what they were in the original report for that quarter, which we blogged about here.

For example, total investments as of Dec. 31, previously reported as $204,032,809, have now been downgraded to $199,685,297. And more significantly, year-to-date net income as of the fourth quarter, previously reported as $22,568,772, has been restated as a net loss of $2,871,665. That's a $25.4 million correction. Ouch.

What happened? To our untrained eye, it's not entirely clear. But here are some of the other figures that got changed -- perhaps our learned readers can help us read between the lines:

ItemOriginally reportedRevised
Allowances for Loan & Lease Losses$8,562,880$9,762,880
NCUSIF Deposit$20,668,234$6,823,468
Accounts Payable & Other Liabilities$17,813,073$23,841,232
Total Other Operating Expenses$30,470,037$50,362,962
Non-operating Income & (Expense)$1,052,725-$3,294,787

We'll get into OnPoint's first quarter of 2009 shortly. But in the meantime, it's worth puzzling over what happened with the accounting for the last quarter of 2008.

Comments (14)

Hmmm. No comments...

Admittedly, big numbers are not my forte, but perhaps the stinky books at OnPoint Credit Union are not as important to readers as our mayor who has been running all over town standing on the gas with his fly open?

A reader has written:

I'm a reporter in the credit union industry, and somebody forwarded me a link to your blog. What happened to OnPoint's NCUSIF deposit was a write down that every federally insured credit union in the country had to take, mandated by the federal government. It's your CU's share of covering industry losses from investments made in mortgage backed securities. Thankfully, the CU industry didn't get too far into these investments, and the CU industry has been able to bail out itself, rather than accept one single bailout dollar from the federal government.
I wrote back:
Why did they not take the writedown when they filed the original report back in January? And what do you make of those other entries -- accounts payable, operating expenses -- that also changed? The NCUSIF deposit fell by under $14 million, but the total items they changed was more than $25 million.

OnPoint isn't the only institution with problems. Wait till the auditing folks are done with the California PERS and the Teacher's retirement funds, and New York and who knows where else.
Check out the scandals at www.propublica.org for the story. Some innocent folks who thought they were saving in secure ways for their retirements are going to be very disappointed in their ROI.

I am not suggesting that OnPoint is weak relative to its peers. As explained in the post, I follow that one institution because it's Portland-based. The changes to the year-end financials did catch my eye, however.

Two additional points. First,the year end call reports are estimates. The final reports are amended in March after the outside auditor's finish auditing the books. Normally the differences would be small but this wasn't a normal year.

Secondly, the main losses here resulted from the NCUA seizure of corporate credit unions in March 2009. The NCUA and the accounting GAAP people didn't issue final advice on how CU's were to deal with the NCUSIF losses until late April. The accounting folks allowed CU's to write off the losses over several years including going back and taking some losses for 2008. It looks to me like OnPoint decided to realize the losses in a couple of large hits in 2008 and 2009. These both account for amending the 12/31/08 call report in March.

I work at 1st tech and as I am aware the write down was some $$ we had to pay to NCUA to cover some losses it incurred in sending $$ to some corp credit unions like wescorp.

If you are wondering what corp credit unions are: corp credit unions don't have branches they provide banking services to the retail credit unions-like onpoint or 1st tech or unitus etc).

For whatever reason we were allowed to add the write down onto the books for 2008, not 2009.

I used to cover credit unions.

Mike is right. All credit unions had to take a huge hit from the extra assessment levied by the NCUSIF for the reasons that GregC described. For those who don't know what NCUSIF stands for - it is National Credit Union Share Insurance Fund. That's the credit union version of the FDIC, Federal Deposit Insurance Fund.

I agree with Jack - OnPoint's changes were much larger than the NCUSIF's levy, so the other numbers are a bit puzzling.

I attended the FirstTech Annual Meeting and found their numbers to be in order, and in fact, quite reassuring.

Every financial institution in the country has scrambled to show a profit in either Q408 or Q109. But the special assessments slammed on them by their regulators (the NCUA in credit unions case, the FDIC in banks case) has screwed them all up.

Furthermore, OnPoint isn't the first organization in the country to retroactively adjust its earnings/loss statement. It happens every single day on Wall Street.

Maybe OnPoint decided to shift more losses to Q408 in order to achieve some accounting goal for 2009. While the discrepancies may seem big between their initial and revised numbers, it is far from uncommon, and hardly startling.

The bottom line is that a net operating loss of $3 million for a $2 billion financial institution in Q408 is comparatively very good.

Jack, have you ever written a story about OnPoint that wasn't intended to stir up a controversy?

Ah, attack the messenger -- that appears to be a common tactic for scoundrels, doesn't it?

I am reporting what I read in the financials. A $25.4 million swing between the initial report to the NCUA and the audited numbers is a major, major shift that people should take note of. The motives of those who speak up about it are hardly as interesting.

But speaking of motives, Mr. Pilcher: As a "financial brands" expert, do you have an axe to grind?

You've written 4-5 stories about OnPoint. All of them try to find a scandal or find some sort of controversy. You have continually picked on what is arguably one of- if not the best financial option available to Portlanders. Why is that? Only the stuff with a potentially diabolical angle is interesting?

You've artfully deflected my one, single question with phrases like "attack the messenger," "motives," and "axe to grind." You've shifted a perceived ad hominem -- which it was not -- into your own attack, including name calling.

I did not attack you or the content of your article. I provided my perspective on what you reported, then asked you what relationship or reason you have for trying to find OnPoint controversies. I don't think I was rude. The question is a fair one. If you choose to address it, I will be happy to read your response. Otherwise, I see no purpose in continuing this conversation.

I have written about your client's financials every quarter since the fourth quarter of 2007:


When they have a good quarter, I'll report it.

OnPoint has had a lot of trouble in recent years, back to its days as Portland Teachers Credit Union: Cliff Dias's $1.6 million salary; the Willamette Week "Rogue of the Week" honor; the Countrywide mortgage joint venture; and now a $25 million swing from unaudited to audited financials. I have written about all of that -- more than the 4 to 5 stories you've found. If they right the ship, I'll write about that, too.

The main reason I take this subject up on this blog is that OnPoint doesn't post much financial information on its own website. There's no meaningful management description of any period's operating results -- just p.r. about how wonderful it all is. It's obvious that they don't want people talking about hard numbers. That's just too bad.

Are you being paid by OnPoint to post here? Do you think it is in OnPoint's interests for you to do so?

They aren't my client.

What does this mean, then?

I worked with the marketing firm that helped OnPoint change names back in 2006. But no, OnPoint is not, nor have they ever been my direct client.

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