The past few years have been unexpectedly tough for the local credit union industry, but experts say it may finally be finding its footing.
Credit unions in Los Angeles County grew both their net income and asset levels in the first quarter from a year ago, while also shedding much of their problem assets, according to data provided by the California Credit Union League trade group to the Business Journal.
“We’re seeing these trending in the direction we hoped they would,” said Daniel Penrod, an industry analyst for the league. “For many years, the credit union numbers were looking bad on the net side. (But) the feeling in L.A. and the coastal regions is that the worst is behind us.”
Credit unions, member-owned cooperatives that offer small loans and banklike services, have traditionally been more cautious and therefore perceived as more sound than other types of financial institutions. But the industry took hefty losses during the recession and lost scores of institutions through mergers or failures, such as L.A.’s Second Baptist Church Credit Union.
But in the first quarter, net income among L.A. credit unions rose nearly 300 percent from the same period in 2010 to $62 million. Total assets crept up slightly to $35.7 billion.
Penrod noted that the decline in delinquent loans, which fell countywide by more than 20 percent to $511 million, was “much larger than expected.”
Still, not every sign was positive. Total loans outstanding fell by 8 percent from last year, which could keep future revenue streams suppressed.
Penrod acknowledged that the industry has a way to go before it gets back to normal, but he expects to see loan growth within the next year.
“The trends are getting back to normalcy, but we won’t see it reflected in the numbers themselves for another three or four quarters,” he said.
Magnum Opus
Opus Bank, a fast-growing bank franchise run by investor Stephen Gordon, isn’t wasting any time expanding its footprint.
The Redondo Beach bank said last week that it has entered into lease agreements to open six Southern California branches, including three – in Beverly Hills, Encino and West Los Angeles – in the county. The offices, which are scheduled to open by the end of the year, would bring its branch network to 12.
Additionally, executives are negotiating deals to open 11 more offices.
“As one of the best capitalized banks in the Western region, we are strategically expanding our network of banking offices up and down the West Coast to deliver high value, relationship-based banking products and concierge-level service,” said Gordon, the bank’s chief executive and chairman, in a statement.
The moves are part of a concerted effort by Gordon to turn Opus from a community bank into a multistate regional franchise. Gordon took the helm of the bank in September after he and a team of investors put $460 million into struggling Bay Cities National Bank and rebranded it as Opus.
The institution is pursuing both organic and acquisitive growth strategies: executives said last week that the bank has received shareholder approval for its previously announced acquisition of Cascade Financial Corp., the Seattle-area parent of Cascade Bank.
Minimerger
Two of L.A.’s smallest banks are joining forces.
First General Bank in Rowland Heights announced that it will absorb Rosemead’s Golden Security Bank in a $4.4 million merger. The deal, which has been approved by both bank boards, is subject to regulatory and shareholder approval.
If the merger goes through, the combined entity, which will retain the First General name, would have $480 million in assets and six locations.
Golden Security, which had suffered losses on commercial real estate loans, was operating with capital below required levels and was ordered by regulators in a 2009 cease-and-desist order to address its deficiencies.
Both banks were founded to serve local Chinese-American communities.
C-Suite News
Manhattan Bancorp, the El Segundo holding company for Bank of Manhattan, revealed in a regulatory filing last week that it has hired Brian Côté as chief financial officer, replacing Dean Fletcher, who left for undisclosed reasons. … Private National Mortgage Acceptance Co. LLC, a Calabasas mortgage investment firm better known as PennyMac, has hired Doug Jones as chief correspondent lending officer.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
