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Wisconsin CUs boosting loan-loss allowance
MADISON, Wis. (3/10/09)--Several of Wisconsin’s credit unions boosted their reserves to offset loan losses this year, but the Wisconsin Credit Union League notes that credit unions remain healthy. “Wisconsin credit unions saw some of the largest gains in the country in loan, asset and membership growth,” said Brett Thompson, Wisconsin Credit Union League president/CEO. Wisconsin credit unions are continuing to lend because members are relying on credit unions for loans now more than ever, Thompson added. As such, many credit unions also are preparing for potential delinquencies given the troubled economy. Fourth-quarter reserves at credit unions increased in 2008, according to the State Office of Credit Unions (The Wisconsin State Journal March 6). The $1 billion asset UW CU and $1.2 billion asset Summit CU, two of the state’s largest credit unions and based in Madison, increased their allowances this year. Summit bumped its allowance to $10.5 million from $2.6 million in December 2007. Summit merged with Great Wisconsin CU last October. UW CU increased its allowance to $6.2 million from $4.5 million last year. It also merged with MATC CU in November, which had no delinquencies, the newspaper said. The $151 million asset Heartland CU, Madison, increased its allowance to $662,625 from $651,535. The $153 million-asset Heritage CU, Madison, boosted its allowance to $759,968 from $751,077. Larger credit unions may be boosting their reserves in preparation for losses from real estate loans, the State Office of Credit Unions told the newspaper. About 66% of larger credit unions’ portfolios are from real estate, whereas smaller credit unions have about 13% of their portfolios in real estate, according to the Office of Credit Unions. Kim Sponem, Summit CU president, said Summit anticipates delinquencies and charge-offs to increase this year. She also noted that credit unions with a higher percentage of real estate loans may be hit harder by losses because real estate loans are larger. UW CU has adjusted its loan loss reserve also, but Lisa Girdharry, UW CU marketing director, told the newspaper that the credit union’s loan losses are lower than the industry average. Wisconsin credit unions’ delinquencies increased only slightly last year, by 1.44%, the league noted.


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