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CU System
Mass. CUs hit by economy but still maintain capital
WORCESTER, Mass. (7/22/09)--Massachusetts' credit unions have been largely immune from the financial industry's turmoil. Although assessments to shore up the corporate credit union system and the National Credit Union Share Insurance Fund (NCUSIF) have taken their toll, the credit unions' capital remains solid. Eighty percent of the state's 221 credit unions lost money in the first quarter, according to National Credit Union Administration (NCUA) data (Worcester Business Journal July 20). Most were profitable a year ago for the same period. Much of the losses are related to an increase in deposit insurance premiums from all credit unions to replenish NCUSIF after NCUA guaranteed all shares of corporate credit unions. "The good news is that they, all the credit unions, had enough capital and could continue to do business," Robert Kimmett, executive vice president of public relations and marketing at the Massachusetts Credit Union League, told the newspaper. Normal accounting requirements would account for the increased insurance fund payment in fourth quarter of 2008 or first or second quarter of this year. However, Congress allowed NCUA to borrow up to $6 billion from the U.S. Treasury. Now credit unions can pay their premiums over seven years instead of all at once. The publication also interviewed Marlborough-based Digital FCU, which said its assessment amounted to $22.7 million. The assessment pushed it into the red for a $17.4 million loss in first quarter, Tim Garner, executive vice president of marketing and strategic planning, told the journal. He noted credit unions can put the premium back on their books in second quarter. Frederick Healey, president/CEO of Workers' CU, Fitchburg, said the credit union managed to have a profit of more than $1 million in 2008 and a first-quarter 2009 profit of $665,000. Workers' has conservative lending policies and diversified its revenue sources, which helped, he told the publication. Credit unions were not involved in the subprime mortgages and are not responsible for the problems in the financial market, Digital FCU's Garner said. However, like everyone else, they are being affected by the problems in the financial market.


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