TIME to be CONCERNED!!!!!!!!!
APPLE VALLEY — After aggressively pursuing home construction loans during boom years, High Desert Federal Credit Union is now reeling from the weak real estate market.
The credit union is coping with 20 percent of loans at least two months delinquent and income losses totaling nearly $4.7 million for the first six months of this year, records show.
While the figures are sobering, credit union officials and independent credit union analysts say the institution remains solvent and safe and that deposits are federally insured by at least $100,000. Individual retirement accounts are insured up to $250,000.
“The real estate market has really had an adverse effect on banks and credit unions alike, and obviously High Desert was not immune to that,”said Ralph Ramirez, a spokesman for the Apple Valley-based credit union. “We’re taking each loan, each member, case by case, because each member has a different story to tell, and we want to do everything that we possibly can to meet their needs to help them recover.”
The rate of accounts delinquent by at least two months reported by the credit union has more than doubled since March, from 8.7 percent to 20.45 percent, which leaves the institution with $24.7 million in delinquent loans, according to NCUA records. Meanwhile, the amount in foreclosed and re-possessed properties has jumped from $340,155 in June 2007 to over $4 million in June 2008, the records show.
The credit union has taken several actions to improve the situation. In addition to cutting expenses across the board by 12 to 15 percent over the past seven months, High Desert Federal Credit Union downsized its full time workforce from 82 in December 2007 to 65.5. The company has also set aside $3.6 million for loan losses, up from the $600,000 set aside in February. About $2.8 million of the loan loss provisions are due to home construction loans, where members who built custom homes became overextended or could no longer afford to make payments, Ramirez said
The current capital ratio for High Desert Federal Credit Union is at 9.01 percent, slightly up from its June 2008 report of 8.85 percent. But it is still below the 10.62 percent first quarter average for California credit institutions, according to Terrin Griffiths, economist for the California Credit Union League.
Let's look at the facts:
1. Delinquent loans have more than doubled from Q1 to Q2.
2. Foreclosed homes are up over 10X y/y.
3. It has only taken reserves of $3.6 million against about $25 million in delinquencies.
CU officials and "indepdendent" CU analysts say "solvent and safe???"
Capital ratio is only about 9% with $3.6 million of reserves. We know that RE debt in CA is selling for $0.20 on the dollar. Can you imagine what the capital ratio would be if the debt was marked to market?????
How many other financial institutions are making similar kinds of reserves. No wonder less than 100 banks are on the FDIC troubled list.....can you imagine how many troubled financial institutions there are if assets and reserves were marked to market?
Remember, conditions have deteriorated rapidly since Q2!!!!!!!!!!
Wall Street knows this, Uncle Ben knows this, the Treasury Secretary knows this......and now you know it. At this point, nothing should surprise you....NOTHING!!!!!!!!!