Orange County’s credit unions have continued to grow assets and members.
The 41 OC-based credit unions on this week’s Business Journal list reported $11.3 billion in assets at the end of June, up 11% from a year earlier.
Meanwhile, members at the credit unions rose 14% to about 805,200 people at the end of June from a year earlier.
The list ranks all credit unions based here by assets, including cash, loans, real estate and securities. The numbers come from the California Department of Financial Institutions and the National Credit Union Administration.
Credit unions are not-for-profits that provide banking services to members, who share some common bond,place of employment, profession, religion or other affiliation.
Interest rates on loans and fees typically are lower than at banks, while rates on deposits are higher.
Net income is given back to members through rebates, dividends or bonuses.
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Profit margins are slim. At $64 million, net income for the 41 credit unions’ first six months of 2006 was just 0.56% of assets, down from 0.63% from a year ago.
There’s no love lost between credit unions and banks.
Banks have pushed to tax credit unions or limit their membership. Credit unions have shot back by saying they keep banks competitive.
Some OC credit unions easily outrank the county’s homegrown banks by assets.
No. 1 Santa Ana-based Orange County Teachers Federal Credit Union far and away dominates the list with $6.5 billion in assets at June 30, a 15% rise from a year earlier.
OCTFCU dwarfs the other 40 credit unions on the list, accounting for nearly 58% of all assets held by locally based credit unions.
It is the fifth largest federally insured credit union in the U.S., according to the National Credit Union Administration.
Net income at the credit union fell 10% to $42 million in the six months ended June 30. The credit union, which caters mainly to school employees and their families, accounted for 66% of all profits at OC-based credit unions in the past year.
Membership in the credit union grew 43% to about 342,100 people in the period.
OCTFCU and rival banks can commiserate on one thing: Higher interest rates have driven down profits.
“The reason our earnings are dropping is because we are in an interest rate situation where rates are going up, and we are lending long and borrowing from our members short,” Executive Vice President Steve Renock said. “It’s a classic situation where when interest rates rise, our margins decrease.”
Part of OCTFCU’s asset growth stems from winning a contract to manage a pension plan for the San Bernardino City Unified School District.
The credit union has opened branches in Redlands and Rancho Cucamonga this past year with another planned for San Bernardino, according to Renock.
OCTFCU also has set aside money for the launch of Comunidad Latina, and an affordable housing program for low-income borrowers looking to buy a home.
The credit union has its share of competition.
Pasadena-based Wescom Credit Union opened an administration center in Anaheim Hills this year that could employ up to 500 workers.
That would make Wescom the second-biggest credit union in OC by employees, behind OCTFCU and its more than 800 workers.
Wescom doesn’t appear on our list since it’s not based in OC.
With $3 billion in assets, Wescom is California’s fourth largest credit union. OCTFCU is No. 2 statewide.
Others have made moves into OC, including Altura Credit Union, which changed its name in late 2004 from Riverside County’s Credit Union.
OCTFCU’s hold on the top spot is solid: It has nearly eight times the assets of No. 2 Brea-based Evangelical Christian Credit Union.
The Christian credit union showed impressive growth, with a 20% rise to $865 million in assets as of June 30.
Evangelical Christian moved up a spot from No. 3 last year on the asset gain.
Profit was flat at $6.1 million.
In 2004, the credit union built a big campus on Imperial Highway in Brea and then relocated from Anaheim.
Membership is open to Christian churches, schools and missionary groups.
“We want to become the premier Christian ministry banking resource,” said Jac La Tour, a spokesman for Evangelical Christian.
As for the credit union’s growth, “It’s due to the good hand of God,” La Tour said.
Growth came despite an 18% drop in membership to 12,228 people. Assets are growing with investment and other financial services tailored to churches, schools and ministry services.
The credit union has about $1.8 billion under management, including an investment-banking arm that uses “biblically based investment management principles.”
Rounding out the top five credit unions: No. 3 Santa Ana-based Orange County’s Credit Union, which held the No. 2 spot last year and came in at $825 million in assets as of June, up 6%; No. 4 La Habra-based American First Credit Union with $673 million in assets, up 5%; and No. 5 Huntington Beach-based NuVision Financial Federal Credit Union at $641 million, down 4%.
This year’s list includes two fewer credit unions than last year’s. In the past year, two Christian credit unions moved from Brea, long considered ground zero for evangelical credit unions.
America’s Christian Credit Union, which ranked No. 8 last year, moved to Glendora so it could expand, according to Bryan London, the credit union’s vice president of marketing.
“We outgrew our space in Brea,” he said.
The credit union also had limited its growth because of a narrow focus. Three years ago, it changed its name from the Nazarene Credit Union to its current name as part of a move to expand its field of membership to include all Christians.
Another former Brea credit union, last year’s No. 35 Southern Baptist Credit Union, combined with San Dimas-based Christian Community Credit Union.
One credit union is in the works.
This summer, Comunidad Latina Federal Credit Union received approval from federal regulators and recently opened its doors in Santa Ana. It becomes only the third credit union chartered in California in the past six years, said John McKechnie, director of public and congressional affairs for the National Credit Union Administration, which regulates credit unions.
Comunidad Latina is set to focus on the large and growing Hispanic population of Santa Ana, according to its organizers. OCTFCU is helping to start Comunidad Latina.
Chief Executive Luis Valerio was hired by OCTFCU to help start the Hispanic-focused credit union.
