The San Diego-based $1.4 billion credit union is focusing on four areas: building revenues, reducing expenses, enhancing business relationships, and managing problem assets proactively. The credit union posted major improvements in expenses and problem assets in the first quarter of 2010. Operating expenses totaled $8.8 million, which is a decline of almost $6 million from a year earlier. Last year’s first quarter loan loss provision was $43 million; for 2010 it is a positive adjustment of $3.7 million, including a one-time adjustment for both operating and provision expenses. The credit union anticipates a provision for loan loss through the remainder of 2010.
The credit union is on target to achieve break-even income this year, which is significantly better than the past two years and $10 million ahead of its initial 2010 projection.
The credit union’s total equity – $65 million at March 31, 2010 – is a significant increase over last year. This total does not include a $52 million allowance account for losses on a loan portfolio of $846 million.
John Tippets, who joined the credit union six months ago as the chief executive officer, cautions that these positive first quarter numbers do not yet predict a long-term trend.
“We are making strides and accelerating our efforts, especially in looking for good quality loans to generate revenue, which has declined substantially over the past 18 months,” Tippets says.
He adds that cutting expenses over the past year has been critical; however, equally important to cutting expenses is building healthier revenue, which is going to be slower and harder to achieve.
The 70th Anniversary
The credit union is celebrating its 70th anniversary in 2010. Next year, its historical core sponsor will recognize its 100th year of Naval Aviation on North Island. The dual anniversaries provide an excellent opportunity for the credit union to focus on its Navy and Department of Defense membership.
One year ago the credit union reported “net worth” of $43 million. It was a poster child of the challenges faced by natural person credit unions in a Sand State. Today, as the economy picks up and consumer confidence returns, it is a credit union rebounding from recession setbacks.
So how did the credit union get through this period of uncertainty and projections of inevitable failure? For the senior leadership, there is a simple answer. They believed in what they were doing — fulfilling an unquenchable, human longing to affirm the positive. In the darkest hours there was always hope. Or in the words of the Negro Spiritual "Ain’t Got Time to Die":
Lord, I keep so busy workin’ fer de Kingdom
Keep so busy workin’ fer de Kingdom…
Ain’t got time to die