Merged Gabriels Community Credit Union Lost $6.1 Million Last Year
Most of the $5.8 million loss occurred during the fourth quarter.
The $27.1 million Gabriels Community Credit Union in Lansing, Mich., which was merged into the $7.6 billion Michigan State University Federal Credit Union (MSUFCU) in East Lansing last month, posted a loss of $6.1 million at the end of 2023, according to NCUA Financial Performance reports.
Most of that loss, however, occurred during the three months ending Dec. 31 when Gabriels Community lost $5.8 million, or an annualized loss that was -78.6% of average assets, compared with net income of $368,465 (4.34% ROA) in 2022′s fourth quarter, the credit union’s fourth quarter Call Report showed. From January through September, Gabriels Community lost $288,692 (-1.15% ROA), down from net income of $487,612 (2.09% ROA) a year earlier.
What’s more, the credit union listed $3.4 million under “Miscellaneous Non-Interest Expense” in the fourth quarter after just $2,465 for the first nine months of 2023. This one-time charge accounts for more than half of Gabriels Community’s fourth-quarter loss.
Regarding the credit union’s financials, MSUFCU President/CEO April Clobes said they “reflect some of the operational concerns that Gabriels was experiencing.”
The credit union also posted a $2.2 million provision for loan losses made in the fourth quarter in addition to the $585,508 made in the first nine months of the year. For all of 2023, Gabriels Community’s provisions were $2.8 million, more than double the provisions for 2022.
From January through September 2023, the credit union posted $373,461 in write-offs, while its net charge-offs in the fourth quarter were $621,370, for a net charge-off ratio of 10.11%. Altogether, Gabriel’s nearly $1 million in write-offs last year generated a 3.85% net charge-off ratio, up from 0.37% a year earlier.
Additionally, the credit union’s 60-day-plus delinquency rate on Dec. 31 was 3.84%, up from 2.21% a year earlier. Both are much higher than credit union averages.
Gabriels Community ended last year with a net worth of -8.52% compared to a net worth of 10.72% at the end of 2022. Its ROA at the end of 2023 was -19.64% compared to an ROA of 2.66% by the end of 2022, according to NCUA financial performance reports.
The federal agency approved Gabriels Community’s consolidation in December, but did not state the reason for it. The NCUA did say that the conditions of the merger met regulatory provisions, which allowed for a waiver of a membership vote.
Clobes said last month the consolidation was approved by the federal agency and the Michigan Department of Financial Services because of “the extenuating circumstances of Gabriels.” She declined to say what those extenuating circumstances were.
“It was a friendly merger that was necessary,” Clobes, who initially announced the consolidation in November, said.
Gabriels Community, chartered in 1957, served more than 2,700 members.