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Wednesday, August 4, 2010

Second quarter loss at OnPoint Credit Union

Our quarterly checkup of the financials of OnPoint Community Credit Union -- our crude gauge of how the local economy is going -- shows a rough second quarter of 2010, as the credit union was required to take another large loss as a member of the deposit insurance pool of which it is a member. That charge -- called a "stabilization expense" -- amounted to $3,233,975, which put OnPoint into the red for the quarter. With the insurance charge taken into account, OnPoint lost $558,020 in the quarter; without the charge, it would have turned a profit of $2,675,955.

Like other credit unions, OnPoint was required to book similar expenses in 2008 and 2009 -- and show an operating loss for the entire year 2008 as a result.

OnPoint's net income for the first half of 2010 was $3,608,811, down 80.58% from $18,586,772 in the first half of 2009. Even without the insurance charge, therefore, it was a weak first half compared to last year. A part of the decreased returns were the $12,062,117 in loans written off so far this year, compared with $10,054,679 at this time last year.

Here are the balance sheet numbers, as recently filed with the National Credit Union Administration:

Item6/30/093/31/106/30/10Quarterly increase (decrease)12-month increase (decrease)
Total investments$449,482,460$556,611,186$624,081,87412.12%38.84%
Federal agency securities$274,981,426$420,887,987$492,671,53817.06%79.17%
Total reportable delinquency - total delinquent loans$26,526,766$31,397,462$28,487,420(9.27%)7.39%
Total reportable delinquency - indirect lending$5,096,962$3,598,018$3,206,668(10.88%)(37.09%)
Total outstanding loan balances subject to bankruptcies$13,911,518$7,004,332$16,007,824128.54%15.07%
Ratio of delinquent loans to total loans (percent)1.231.511.39    
Ratio of total delinquent loans to net worth (percent)10.6711.9610.88   

Delinquent loans are those delinquent for two months or more.

In the second quarter of 2010, deposits increased from $2,446,618,429 to $2,503,549,729 -- a fourth consecutive quarterly increase, of 2.33%. Deposits a year earlier were $2,411,602,745, and thus for the year, deposits were up 3.81%.

That brings us to our comparison of some of OnPoint's financial data with that of three other Oregon-based credit unions: Unitus here in Portland, First Tech in Beaverton, and Oregon Community down in Eugene.

One number that we've been tracking for the group has been the ratio of delinquent loans (two months or more) to total loans -- the higher the number, the worse the portfolio from a delinquency standpoint. Here are the percentages for all four credit unions in that department at three recent reporting dates:

Credit union6/30/093/31/106/30/10
First Tech0.950.960.95
Oregon Community1.131.191.22

Another ratio that we've been watching is delinquent loans to net worth. Here are the percentages for the group on that score:

Credit Union6/30/093/31/106/30/10
First Tech6.065.715.52
Oregon Community12.6313.1113.56

Finally, here are the year-to-date net income (loss) figures for the group, worth noting for the trends. All four credit unions took insurance charges in 2010, which are reflected in these half-year numbers:

Credit Union6/30/096/30/10
First Tech$15,679,047$4,725,065
Oregon Community($1,600,252)$3,311,829

As best we can tell, the proposed merger of First Tech into Addison Avenue Credit Union in Palo Alto is still awaiting regulatory approval and a member vote. Unless we're missing something, this is taking longer than anticipated. In any event, if the merger is consummated, First Tech as we know it in these reports will cease to exist.

Comments (1)

These tidbits on what's happening with real people (credit union customers) in the real economy are welcome, informative and illustrative.

The weakness indicators are pretty constant. The small increase in deposits is consistent with very modest income growth and savings rates that have settled nationally at around 6 percent.

In sum, while the economy stabilized a while back it's going nowhere fast.

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