Kinecta Federal Credit Union, Manhattan Beach, Calif., posted a $30.6 million loss for 2011, citing problems with its mortgage business.
The CU wrote down the value of its residential mortgage servicing rights by $19 million.
Kinecta CEO Roger Ballard said the CU hopes to recapture some of the lost value over time -- maybe as much as $10 million, as the mortgage market improves going forward.
Lower mortgage originations among its wholesale partners also ate into Kinecta's loan revenues. The CU table funds home mortgages in roughly 35 states.
The Kinecta losses have revised the time frame for one of the biggest ever credit union mergers, according to Ballard, the CEO of NuVision, who also has been running Kinecta for the past year. “In all candor, we want to see some improvement in our financial performance,” Ballard said.
He expressed confidence the merger, first announced in June 2010, will go through, but probably not until 2013.
The proposed combination will create a new credit union giant with $4.4 billion of assets and 300,000 customers, bearing the Kinecta name and headed by Ballard. It would be the second-largest credit union merger ever, behind only last year's combination of California's Addison Avenue Federal Credit Union, and Oregon's First Tech Credit Union, which created a $5.1 billion institution.
