OnPoint swoon partially explained
Faithful and knowledgeable readers have supplied a partial answer to our question of yesterday of how OnPoint Community Credit Union's fourth quarter 2008 results took a $25.4 million nosedive between the time they were first reported (in late January) and the time the latest quarter's results were reported (in late April). Apparently $13.8 million of the change came as a result of the meltdown of a few big "commercial" credit unions, which we blogged about here in late March. That collapse reportedly required that all insured credit unions in the country take a big hit to their balance sheets, and the regulators let them take it to their fourth quarter 2008 financials, rather than their first quarter 2009's, if they wished. OnPoint apparently opted to do that. Maybe somebody's performance bonus looks better that way -- who knows with the executive class these days?
The accounting move doesn't exactly inspire confidence in the credit union deposit insurance system. OnPoint had been showing an asset of $20.7 million as its "deposit" in that system. After the writedown for the latest unpleasantness with the commercial credit unions, that asset dropped to $6.8 million -- a 67 percent drop in the insurance "deposit" in a single stroke. Gulp.
Even this doesn't sum up all the bad news, however. In addition to the insurance hit, there are nearly $11.6 million more of downward adjustments in OnPoint's audited numbers from where they were when the institution first reported its quarterly results in January. What was the rest of it all about? The full picture is still unclear.
We're still digesting the first quarter of 2009 while we ponder the mysteries of the fourth quarter of 2008. More on that first quarter momentarily.
| Posted at 8:45 AM | Permalink |
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Comments (6)
Could the swoon because of customers taking an exit as we did? I'm sure our small CD would not make much of a dent but the multiplier of hundreds of us might make a difference.
The arrogance of the manager did it for us.
Posted by KISS | May 8, 2009 10:37 AM
Is OnPoint using the typical funny money lingo of "by not hiring 4 managers we are saving $200,000!" that the Reynolds School District is now using in selling their new budget?
I always laugh when organizations who are millions in the hole use that kind of funny money baloney. Ushering forth jobs that don't exist will not create dollars and employing such tactics implies that your board of directors thinks that the public is stupid.
The only stupid is the board who votes off on using inane PR tactics such as "By not hiring X, we are saving Y" when Y does not exist in the first place.
Makes me wonder how people get on boards in the first place 'cause it looks like it has very little to do with honest analysis and integrity.
Posted by YoungOregonMoonbat | May 8, 2009 1:04 PM
"The accounting move doesn't exactly inspire confidence in the credit union deposit insurance system."
I guess I would have to disagree on this one Jack. What it means is that the CU insurance fund took a big hit and the CU industry is bailing itself out by using funds currently existing on their books. And without a dime of TARP money. Even with the hit here OnPoint's call report show it still has net worth of over $234 million as of 3/31/09.
Will it hurt earnings this year (assuming most CU's take the hit on the current books)? Yes? Will most CU's be placed in financial peril by the? No? The average CU, like OnPoint had in the area of a 10% net worth before the Corporate failures so losing part of 1% will hurt but won't be fatal.
Maybe it's a glass half full kind of thing but I still believe you are better off using a CU as your personal financial institution than a bank.
Posted by GregC | May 8, 2009 2:18 PM
Alright, I admit my earlier post was a little too hard on for-profit and non-profit Board of Directors. Unless the organization has a flattened structure where employees can attend Board Meetings, then the sole source of information about the organization is the CEO or ED. This leads to many Boards getting information skewed by the CEO or ED for whatever reason.
That being said, the Board of Directors as upper management steer the organization acting as the "captains of the ship." This responsibility makes it entirely important for individual Board members to get the most amount of information possible regarding such important matters as a budget. If it comes down to individual board members showing up during working hours and talking to individual employees, then so be it.
Considering the condition of the financial services sector where derivatives based scams and speculation were rampant for a decade, one can place blame on the Board for writing off on this stuff.
Posted by YoungOregonMoonbat | May 8, 2009 3:09 PM
Number of changes in OnPoints quarterly report may be explained by this item:
Friday, May 8, 2009, 10:58am PDT
OnPoint names new CFO
Portland Business Journal
"OnPoint Community Credit Union announced Friday that it has named James Hunt its new chief financial officer.
"He will be responsible for accounting and finance at Oregon’s largest credit union. Portland-based OnPoint has more than 194,000 members and $2.5 billion in assets.
"Hunt comes to OnPoint from Washington Mutual, where he served as senior vice president for finance."
No mention of previous CFO, or why said CFO departed. Hmmmm
No mention on the OnPoint website either.
Posted by JoWriter | May 8, 2009 5:05 PM
losing part of 1% will hurt but won't be fatal.
Nobody said it would be.
It amuses me that even talking about the quarter at OnPoint is immediately cast as an unfair criticism. It's reality, folks. They just lost two thirds of an insurance cushion, and that's just the fallout from other people's screwups.
Posted by Jack Bog | May 8, 2009 6:31 PM