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Mission Federal Quarterly Report Shows Signs That Recovery Is Under Way

Mission Federal Credit Union has been hit by four quarters of net losses and high delinquency rates, but results for the most recent quarter show signs of recovery.

Mission Federal was one of hundreds of credit unions that purchased loans in 2006 from Centennial, Colo.-based Centrix and ended up holding millions of dollars in bad debt, which the credit union has been trying to dump.

Centrix promised big returns on subprime auto loans, but filed for bankruptcy in September, which took a toll on the bottom line of many participating institutions, including Mission Federal.

Mission Federal mitigated some damage this quarter, and reported a first-quarter net loss of $83,883, compared with a loss of $8 million in the fourth quarter of 2006, but down from first-quarter 2006 net income of $99,406.

The return on average assets for the quarter was negative two-hundredths of a percent after its lean net loss, well below the statewide and nationwide averages of 0.8 percent.

Mission Federal’s total assets as of March 31 were more than $1.9 billion.

Other buyers of Centrix loans fared better this quarter than did Mission Federal, although its portfolio has signs of improvement.

San Diego Metropolitan Credit Union, with assets of $280.5 million, which also purchased loans from Centrix, posted net income of $390,602 for first-quarter 2007 , its lowest earnings since the Centrix debacle.

Another local Centrix participant, Great American, has assets of $57.1 million and net income of $108,847, recovering from consecutive net losses in 2006.

Mission Federal , the second largest credit union in the county based on assets (behind San Diego County Credit Union) , has reduced loan delinquencies from the previous period by 33 percent to $13.2 million from $19.6 million.

Year over year, loan delinquencies at Mission were down 62 percent from $21.3 million in March 2006.

However, according to statistics from the California Credit Union League, Mission Federal’s asset quality is still below nationwide and statewide averages.

Mission Federal’s ratio of delinquent loans to total loans was 0.93 percent, double the statewide average of 0.47 percent and a third higher than the nationwide average of 0.68 percent.

Great American was on pace with the statewide delinquent-loans-to-

total-loans average of 0.47 percent and San Diego Metropolitan was at 0.33 percent.

Mission Federal’s ratio of net charge offs to average loans was 1.2 percent , almost triple the statewide and nationwide average rates of 0.42 percent and 0.45 percent, respectively.

Representatives at Mission Federal were unavailable for comment.

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