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This page contains a single entry from the blog posted on February 14, 2011 10:41 AM. The previous post in this blog was Free, legal music downloads. The next post in this blog is Cha-ching! Your tax and tuition dollars at work. Many more can be found on the main index page or by looking through the archives.



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Monday, February 14, 2011

OnPoint saw profit cut in half in 2010

Our quarterly look at the financials of OnPoint Community Credit Union, designed to give us a picture of the state of the Portland-area economy, reveals a tough year in 2010 but a stable fourth quarter.

OnPoint's net income for 2010 was $13,871,613, down 51.19% from $28,419,382 in 2009. Operating expenses jumped from $56,459,380 in 2009 to $75,317,579 in 2010 -- a 33.4% increase. This included a 77.13% increase ($2,743,397) in premiums and expenses relating to the nationwide insurance system that backs up credit unions, including rescuing weak ones. Another part of OnPoint's decreased profit was the $22,514,914 in loans it wrote off in 2010, compared with $19,378,445 in 2009 -- a 16.19% increase.

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

Item12/31/099/30/1012/31/10Quarterly increase (decrease)12-month increase (decrease)
Total investments$432,665,342$625,128,631$625,611,2730.08%44.59%
Federal agency securities$285,152,450$505,421,759$517,311,7412.35%81.42%
Total reportable delinquency - total delinquent loans$22,551,519$29,353,063$28,623,943(2.48%)26.93%
Total reportable delinquency - indirect lending$4,449,517$3,055,264$2,522,542(17.44%)(43.31%)
Total outstanding loan balances subject to bankruptcies$29,565,449$25,828,172$18,544,050(28.2%)(37.28%)
Ratio of delinquent loans to total loans (percent)1.061.461.45    
Ratio of total delinquent loans to net worth (percent)8.7311.0410.52   

Delinquent loans are those delinquent for two months or more.

In the fourth quarter of 2010, deposits decreased from $2,488,675,931 to $2,473,555,611 -- a 0.61% decrease and a second consecutive down quarter. Deposits at the end of 2009 were $2,381,752,154, and thus for the year 2010, deposits were up 3.85%.

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 union12/31/099/30/1012/31/10
First Tech1.091.251.06
Oregon Community1.510.660.73

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

Credit Union12/31/099/30/1012/31/10
First Tech6.637.386.92
Oregon Community16.917.448.09

Finally, here are the 2010 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 numbers:

Credit Union20092010
First Tech$23,354,779$7,501,420
Oregon Community($78,980)$6,454,062

It's interesting that First Tech had a saggy year, just as its proposed merger into Addison Avenue Credit Union in Palo Alto was being approved. It will be interesting to see how the combined companies perform going forward, although it will doubtlessly be difficult to make a meaningful comparison to past performance for a while. Meanwhile, little Oregon Community and Unitus bounced back strongly from bad 2009's, whereas OnPoint declined.

Comments (4)

Jack, looking at your back-up spreadsheet, the OnPoint #s illustrate what’s been going on at many financial institutions. Deposits grew last year by $92 million, but loans decreased by $153 million, with the difference being soaked up by the significant growth in Federal Agency Securities (which I assume means Fannie/Freddie).

Loan balances haven’t been growing or have been growing slowly in the productive economy. Instead of leveraging consumers and business there’s been a carry trade from depositors (getting zero or close to zero nominal returns) into the mortgage backed security market (Fannie/Freddie, with yields up to 4 percent) with financial intermediaries pocketing the difference. That’s helped bank/financial institution earnings, and helped stabilize housing markets by keeping mortgage interest rates low, but has done so at the expense of depositors who are getting negative real returns on their savings. Such is the impact of accommodative monetary policy.

Meanwhile, over in the Too Big to Prosecute (TBTP) segment of the financial community, JPM's Jamie Dimon is burdened by too much cash:
"'I’m worried about how much capital is going to build up in the system in the U.S.,' Dimon said. 'In 12 months we’re looking at a lot of capital we can’t use. That may make people do stupid things.'"

Writing in the 6Nov09 Seattle Times, Kristi Heim mentioned one of the "stupid things" -- in Mr Dimon's estimation -- in the Seattle area:

"In the current jobless recovery, people are running out of unemployment benefits before they find job openings. Some may look to starting a small business of their own, but who would loan them money without a track record? Certainly not banks.

For such local entrepreneurs, the answer has been non-profits like Community Capital Development. CCD has provided $26 million to more than 1,000 previously "unbankable" local businesses, including Plum Bistro, Bedrock Industries and Utilikilts.

Another blow was losing Washington Mutual, which was one of CCD's top lenders. The new owner, JPMorgan Chase, does not lend to CCD."

Newleaf has described one reason JPM's Dimon has too much capital. There are others.

For example, Mr Dimon apologized today for JPM's illegal mortgage charges and foreclosures against veterans. No promise not to do it again. And no indication that AG Eric Holder, a Wall St instrument prior to his appointment, will bring criminal charges against anyone at JPM.

Yes, new business and small business are job generators, but CCD's loan criteria are as follows:

What is your Loan Criteria?

We make our investment decisions based on the following "5 C's of Financing."

Character - The owner's business character as reflected on a personal credit report.
Capacity - The owner's ability to be successful with the business. Proven by a pristine business plan, thought-out business model, experience in the industry, and solid financial statements.
Capital - The owner's contribution of at least 20% of the requested financing amount.
Collateral - Acceptable collateral to back the loan in case of default.
Cash Flow - The businesses ability to pay its owner, employees, service the debt, while leaving sufficient operating cash.

I would guess that not one in a thousand individuals could satisfy the criteria when at the tail end of the unemployment benefit stream.

The answers to spurring small business growth and creating demand for productive capital lie in removing regulatory barriers and eliminating government mandates.

Newleaf, could you be more specific about the "regulatory barriers" you would like removed and the "government mandates" you think should be eliminated "to [spur] small business growth and [create] demand for productive capital?"

Just yesterday, as reported in the NYTimes:

"Republican lawmakers implored financial regulators on Wednesday to exempt airlines, manufacturers and thousands of other nonfinancial companies from new rules governing derivatives trading, warning that jobs and corporate profits were at risk."

Some find such calls for deregulation dangerous and hypocritical; for example, again from the NYT:
"Representative Stephen Lynch, Democrat of Massachusetts, warned: 'You think regulation is costly? How about the $7 trillion we just lost from not regulating the derivatives markets?'"


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In Vino Veritas

Locations, Spanish Red Wine
Locations, Argentinian Red Wine
La Antigua Clásico, Rioja 2011
Shatter, Grenache, Maury 2012
Argyle, Vintage Brut 2011
Abacela, Vintner's Blend #16 Abacela, Fiesta Tempranillo 2014
Benton Hill, Pinot Gris 2015
Primarius, Pinot Gris 2015
Januik, Merlot 2013
Napa Cellars, Cabernet 2013
J. Bookwalter, Protagonist 2012
LAN, Rioja Edicion Limitada 2011
Beaulieu, Cabernet, Rutherford 2009
Denada Cellars, Cabernet, Maipo Valley 2014
Marchigüe, Cabernet, Colchagua Valley 2013
Oberon, Cabernet 2014
Hedges, Red Mountain 2012
Balboa, Rose of Grenache 2015
Ontañón, Rioja Reserva 2015
Three Horse Ranch, Pinot Gris 2014
Archery Summit, Vireton Pinot Gris 2014
Nelms Road, Merlot 2013
Chateau Ste. Michelle, Pinot Gris 2014
Conn Creek, Cabernet, Napa 2012
Conn Creek, Cabernet, Napa 2013
Villa Maria, Sauvignon Blanc 2015
G3, Cabernet 2013
Chateau Smith, Cabernet, Washington State 2014
Abacela, Vintner's Blend #16
Willamette Valley, Rose of Pinot Noir, Whole Clusters 2015
Albero, Bobal Rose 2015
Ca' del Baio Barbaresco Valgrande 2012
Goodfellow, Reserve Pinot Gris, Clover 2014
Lugana, San Benedetto 2014
Wente, Cabernet, Charles Wetmore 2011
La Espera, Cabernet 2011
King Estate, Pinot Gris 2015
Adelsheim, Pinot Gris 2015
Trader Joe's, Pinot Gris, Willamette Valley 2015
La Vite Lucente, Toscana Red 2013
St. Francis, Cabernet, Sonoma 2013
Kendall-Jackson, Pinot Noir, California 2013
Beaulieu, Cabernet, Napa Valley 2013
Erath, Pinot Noir, Estate Selection 2012
Abbot's Table, Columbia Valley 2014
Intrinsic, Cabernet 2014
Oyster Bay, Pinot Noir 2010
Occhipinti, SP68 Bianco 2014
Layer Cake, Shiraz 2013
Desert Wind, Ruah 2011
WillaKenzie, Pinot Gris 2014
Abacela, Fiesta Tempranillo 2013
Des Amis, Rose 2014
Dunham, Trautina 2012
RoxyAnn, Claret 2012
Del Ri, Claret 2012
Stoppa, Emilia, Red 2004
Primarius, Pinot Noir 2013
Domaines Bunan, Bandol Rose 2015
Albero, Bobal Rose 2015
Deer Creek, Pinot Gris 2015
Beaulieu, Rutherford Cabernet 2013
Archery Summit, Vireton Pinot Gris 2014
King Estate, Pinot Gris, Backbone 2014
Oberon, Napa Cabernet 2013
Apaltagua, Envero Carmenere Gran Reserva 2013
Chateau des Arnauds, Cuvee des Capucins 2012
Nine Hats, Red 2013
Benziger, Cabernet, Sonoma 2012
Roxy Ann, Claret 2012
Januik, Merlot 2012
Conundrum, White 2013
St. Francis, Sonoma Cabernet 2012
Villa Antinori, Toscana 2012
Decoy, Cabernet, Sonoma 2013
Marqués de Murrieta, Reserva Rioja 2010
Kendall-Jackson, Grand Reserve Cabernet 2009
Seven Hills, Merlot 2013
Los Vascos, Grande Reserve Cabernet 2011
Abbot's Table, Columbia Valley 2014
Forlorn Hope, St. Laurent, Ost-Intrigen 2013
Upper Five, Tempranillo 2010 and 2012
The Four Graces, Pinot Gris 2015
Topsail, Syrah 2013
Jim Barry, The Lodge Hill Shiraz 2013
Robert Mondavi, Cabernet, Napa Valley 2012
Adelsheim, Pinot Gris 2014
Boomtown, Cabernet 2013
Boulay, Sauvignon Blanc 2014
Domaine de Durban Muscat 2011
Patricia Green, Estate Pinot Noir 2012
Crios, Cabernet, Mendoza 2011
WillaKenzie, Pinot Gris 2014
Dehesa la Granja, Tempranillo 2008
Abacela, Vintner's Blend #15
Selvapiana, Chianti Ruffina 2012
Joseph Carr, Cabernet 2012
Prendo, Pinot Grigio, Vigneti Delle Dolomiti 2014
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Wente, Merlot, Sandstone 2011
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Monmousseau, Vouvray 2014
Duriguttti, Malbec 2013
Ruby, Pinot Noir 2012
Castellare, Chianti 2013
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Amy Stewart - Girl Waits With Gun
Philip Roth - The Plot Against America
Norm Macdonald - Based on a True Story
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Jack London - The House of Pride, and Other Tales of Hawaii
Jack Walker - The Extraordinary Rendition of Vincent Dellamaria
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Barry Glassner - The Gospel of Food
Phil Stanford - The Peyton-Allan Files
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J.K. Rowling - Harry Potter and the Sorcerer's Stone
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Donald Miller - A Million Miles in a Thousand Years
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Penda Diakité - I Lost My Tooth in Africa
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Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 3
At this date last year: 35
Total run in 2016: 155
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In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
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In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269

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