California Coast Credit Union
August 20, 2010 by staff
California Coast Credit Union, Credit unions have a reputation as small, conservative and interested community – not the kind of financial houses that get rattled when the economy turns down.
But that reputation can not be earned.
County of Los Angeles has lost 20 credit unions, more than 11 percent of the total, since the beginning of last year, mainly due to failures or mergers, according to a Business Journalanlysis of data from regulators.
That compares with eight local commercial banks that were lost in that period, about 10 percent of its total.
Part of the reason that the industry of the credit union has made is that most customers are individuals and not companies, and a persistent unemployment rate of more than 12 percent, many people have not been able to pay your car or home loans.
Beyond that, credit unions have been allowed to expand and offer new products in recent years. Analysts said some institutions expanded recklessly during the housing boom, which makes them vulnerable when the recession took hold.
“There are many credit unions in the markets was not immediately understand, and which led to some bad decisions that many are paying today,” said Tom Glatt, Jr., founder of Glatt Consulting LLC, a consulting firm in credit union Wilmington, North Carolina
It is true that not all credit unions are suffering, with many seeing significant growth in their deposits. Moreover, at least part of the contraction as a result of strategic mergers between credit unions in relatively strong financial position.
Of the credit unions that the county has lost, most have been merged with other credit unions. However, four have failed, two have closed voluntarily and one moved its headquarters across the country after its parent company relocated.
The closures of the county does not include the region’s most spectacular recent failures Credit Union: June 25 seizure of Arrowhead Credit Union in San Bernardino by regulators who charged the executives with the inaccurate reporting of financial data.
The latest closure in the Los Angeles County occurred July 31 when regulators closed Certificate in Commerce Federal Credit Union. Founded more than 60 years, the institution had persevered through many crises. However, as a number of other credit unions, which had been engaged in a variety of products from problem loans, including adjustable rate mortgages.
“There are a number of credit unions that expanded very aggressive and has had many problems,” said Stephen Weakley, executive director of Vons Credit Union in El Monte, who took over the assets of licenses after it was closed. “For a lot of credit unions, capital has become critical, and many of them are struggling.”
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