High rates hurt credit union earnings

The Journal staff

Wisconsin's 394 state-chartered credit unions had profits of $60.1 million in 1994, down 9.1% from the year before, according to figures released by the credit union commissioner.

Most of the drop in profits was due to declining margins in a year of rising interest rates, said Thomas R. Ezdon, chief examiner for the Office of the Commissioner of Credit Unions.

Examiners look for net income to stay above 1% of assets, Ezdon said, and the average state credit union had a net income of 1.08% of assets in 1994, compared with a national average of 1.1%.

Although state earnings ranked near the middle of the national pack last year, Wisconsin credit unions, as a group, remained among the most stable and solvent in the nation, Ezdon said.

No Wisconsin credit unions reported losses to the national insurance fund for the fourth straight year, the commissioner's report said.

State credit unions increased their cash reserves by 9.6% in 1994 and had an average capital- to-assets ratio of 10.95%. That is above the national average ratio of 9.6%, said Charles W. Sullivan, president and chief executive officer of the Wisconsin Credit Union League.

The capital-to-assets ratio measures financial strength. A range of 8% to 12% is recommended for credit unions, Sullivan said.

The commissioner's report did not include figures from three state institutions: Wisconsin Corporate Central Credit Union, Hales Corners; Heritage Federal Credit Union in Madison; and Trane Federal Credit Union in La Crosse.

Copyright 1995
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