Alabama credit unions post $68.3 million profit in 2Q
Antrenise Cole Date: Friday, September 30, 2011, 5:00am CDT Profits soared at Alabama’s credits unions in the second quarter, up 60 percent from the same period a year ago. The aggregated net income for the credit unions was $68.3 million for the quarter that ended June 30, compared to $42.6 million in the second quarter of 2010, according to data from the National Credit Union Administration. Patrick La Pine, president and CEO of the League of Southeastern Credit Unions, said the increase in earnings was mostly due to the credit unions putting aside less money for sour loans. Credit unions used that same tactic to get results in the first quarter of the year. “Credit unions are seeing less delinquencies in loans and net charge‐offs (loans that credit unions no longer collect on and are removed from their balance sheets), and therefore, they are having to set less money aside for loan losses,” he said. The loan delinquencies total for all loan types was $88.2 million in the second quarter, an 8.5 percent decrease from the $93.4 million reported the prior year. Net charge‐offs were down 24 percent to $24.5 million. APCO Employees Credit Union, the largest credit union in the Birmingham metro area, was among the local credit unions that reported an increase in earnings. It reported $8.5 million in net income for the second quarter, a 49 percent jump from the $5.7 million posted a year ago. APCO Employees CEO Merrill Mann said having to reserve less money to cover bad loans has helped improve his credit union’s earnings, but the biggest benefit to the institution is its cost‐controlling measures. “We’ve worked extremely efficiently,” he said. “We have about 90 employees, and we’re over $2 billion in assets, which is very efficient for that size of a credit union or any financial institution.” Not all credit unions in the Birmingham metro reported higher profits for the second quarter. Alabama Telco Credit Union, the third largest credit union in the area, had a net income of $1.2 million, a slight dip from the $1.4 million reported in 2010. Alabama Telco CEO Linda Cencula said the low interest rates and a decrease in the demand for loans significantly impacted earnings. “Right now, people aren’t borrowing as much as they did in the past, and the ones who are borrowing are doing so at lesser rates, so we’re making less money,” she said. Antrenise Cole covers banking, finance, accounting and law for the Birmingham Business Journal.