Friday, August 29, 2008

The Weak Are Taken Over By The Strong

Golden 1, 1st United credit unions to merge

The Golden 1 Credit Union will merge with 1st United Federal Credit Union, a two-branch financial institution with $19 million in assets.

The National Credit Union Administration chose Golden 1 to merge with 1st United. “This merger is wonderful news for members of both credit unions,” said Teresa Halleck, president and chief executive officer of Golden 1.

1st United was founded in 1960. The credit union -- which draws its membership base from 150 companies -- has branches in San Jose and Gilroy. The Golden 1 was founded in 1933 to serve California state employees.

The credit union, which is celebrating its 75th anniversary, has 75 offices and more than 270 ATMs in the state. The Golden 1 is the state’s largest credit union, with $6.9 billion in assets and 690,000 members.
Here's 1st United's I&E for the last year from the NCUA. I'm not sure this is "wonderful news" for Golden 1 members. Note that of the $19 million in "assets," $13 million are either real estate loans or unsecured loans.

INCOME & EXPENSE:
Line Item
Jun-2007Sep-2007%ChgDec-2007%ChgMar-2008%ChgJun-2008%Chg
Loan Income*880,6751,302,539-1.41,727,370-0.5368,958-14.6713,304-3.3
Investment Income*13,05719,8821.523,229-12.43,001-48.36,3235.3
Other Income*115,847162,719-6.4219,0601.052,815-3.6115,4919.3
Salaries & Benefits*334,720493,606-1.7638,771-2.9146,036-8.6297,6491.9
Total Other Operating Expenses*279,783426,2081.6566,723-0.3169,98020.0306,216-9.9
Non-operating Income & (Expense)*0-2380-23825.00100.031,7480
Provision for Loan/Lease Losses*298,448528,44818.01,051,12749.21,628,791519.82,050,889-37.0
Cost of Funds*308,991463,237-0.1631,2422.2149,948-5.0276,850-7.7
Net Income*-212,363-426,597-33.9-918,442-61.5-1,669,981-627.3-2,064,73838.2

* Items are year-to-date. %Change ratios are Annualized.

2 comments :

Wadin' In said...

Argh Captain Ahab. Great choice of photo for the thread, but who represents Moby Dick and who represents Peg Leg in this scenario?

Darth Toll said...

Here's an interesting article from Mish that asks the question: When will RE prices bottom? It's specific to Socal but has direct relevance to the discussion we were having a couple of threads ago. Mish says that RE will bottom at 1999 nominal levels and this seems reasonable.

http://globaleconomicanalysis.blogspot.com/2008/09/when-will-southern-california-home.html

In the comments section there was this, which argues for a more bearish scenario: "From 1960 to 1997 the number of homeowners in the US was between 63% and 65%, that was in good times, bad times, great times, terrible times. By 2005 homeownership almost hit 70%, we are currently about 68% and dropping (these numbers are from gov statistics). Question, if homeownership maintained at 64% plus or minus 1% for 37 years, then it overshoots by 6% because of ridiculous lending standards, doesn't it make sense that it will undershoot 64% by at least 4%? California will not go back to 1999 levels, they will go all the way back to 1990 levels at a minimum before this is over."

I'm not quite that bearish, but it would be reasonable to expect an undershoot for the home ownership rate as a reversion to the mean. 60% home ownership rate is very possible. This would mean houses would go well below 1999 nominal prices.

Also, Mish argues that 2004 prices won't be seen for another 20 years and this also seems likely.