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GreenState Credit Union loses $73M in last quarter of 2023
North Liberty-based credit union says losses not related to CEO’s retirement
Iowa’s largest credit union lost $73 million in the last quarter of 2023 due to loan defaults and a fast rise in interest rates, officials said.
GreenState Credit Union, based in North Liberty, has more than 447,000 members with 32 office locations and assets of more than $11 billion.
The credit union lost about $78 million in all of 2023, with the bulk falling in the final quarter. Loan loss provisions rose by $60.4 million and net interest fell by $19.4 million, as first reported by the Credit Union Times.
GreenState spokesman Jim Kelly confirmed the losses, but said GreenState “remains well capitalized” and one of the largest credit unions in the nation with more than $1 billion in cash reserves.
GreenState was among four top U.S. credit unions to lose a combined $122 million in the last three months of 2023 as there were fewer loan originations and rising costs, the Credit Union Times reported. The news outlet found the losses by checking the nation’s 10 largest credit unions and others that reported layoffs.
“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.”
The fast rise in interest rates has slowed home sales, which means fewer loans. At the same time, banks and credit unions are affected by higher interest rates because the cost of deposits goes up.
“This has caused margin compression, which greatly reduces earnings,” Kelly said. “Over time, the new loans we produce (at today’s rates) will help to relieve this.”
GreenState eliminated 75 positions in 2022, with 42 of those part of a layoff in September 2022. Other employees were laid off in smaller numbers or empty positions were eliminated, Kelly said.
“GreenState acquired two banks over the past two years and economies of scale generally occur soon after that event,” he said.
Collins Community Credit Union, based in Cedar Rapids, laid off 38 employees, mostly from the mortgage division, in October 2022.
GreenState Chief Executive Officer Jeff Disterhoft suddenly retired last fall, but Kelly says it’s not related to the credit union’s losses. When The Gazette asked whether the board of directors had asked Disterhoft to step down, Kelly said: “Jeff and the Board came to the decision together.”
Several others on GreenState’s executive team left after his retirement, Kelly said.
Earlier this month, the credit union named a new CEO, Vikram Israni, who previously was chief financial officer at Wings Credit Union in Apple Valley, Minn. Israni has an MBA from the American Graduate School of International Management and has worked more than 25 years in the financial services industry.
“We have already made changes and are working our way back to positive earnings,” Kelly said this week. “Vikram’s extensive experience in banking will help us to get there faster.
“As for the impact to our members, we continue to offer great rates and low fees through this challenging time. We have excellent staff who have helped us through difficult economic times in our 86-year history, and we will navigate through this as well.”
Comments: (319) 339-3157; erin.jordan@thegazette.com
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