NORTH LIBERTY, Iowa–GreenState Credit Union said the $73 million loss it posted in Q4 2023 was the result of loan defaults and the fast increase in interest rates.
In an interview with the Gazette, the $11.35-billion GreenState, which is the largest in Iowa, posted a $62.5-million loss for 2023. It finished the year with net worth of 8.72%. It has also boosted its loan loss provisions.
GreenState spokesperson Jim Kelly told the Gazette the credit union “remains well capitalized.”
“Loan losses have increased over several product lines primarily due to the difficult economic conditions consumers are facing,” Kelly told The Gazette. “Not only are good and services more expensive, but the cost of debt for those that have variable rate loans has risen sharply.”
Kelly said high rates have slowed home sales, which means fewer loans, while at the same time it has to pay more for deposits.
Feeling Margin Compression
“This has caused margin compression, which greatly reduces earnings,” Kelly told the publication. “Over time, the new loans we produce (at today’s rates) will help to relieve this.”
The report noted that GreenState Credit Union acquired two banks over the past two years and that it expects to see economies of scale in the future from those acquisitions.
GreenState CEO Jeff Disterhoft left the credit union in 2023, but Kelly told the Gazette it was not related to the balance sheet issues. Several other members of the executive team have also left.
Working Toward Positive Earnings
As CUToday.info reported, Vikram Israni has been named as the new CEO.
“We have already made changes and are working our way back to positive earnings,” Kelly told the Gazette. “Vikram’s extensive experience in banking will help us to get there faster.
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