Backed with financial help from supporters, the Bermuda Industrial Union (BIU) Members' Credit Union Co-Op Society has pulled itself out of a deficit position.

However, the Credit Union's position was hurt this year due to a five-fold increase in allowance for doubtful loans and write-offs. The Credit Union posted a profit of $76,917 for the 1997 financial year, about 49 percent below that of 1996. Because of an accumulated deficit of $51,353 brought over from the profit was reduced by that amount to accumulated earnings of $25,564.

This is a comeback from a troubled financial past which came to a head in 1983 when the Credit Union had to close its doors and accumulated a deficit of 50 percent of its total assets.

Then the BIU and the union's construction division bailed the Credit Union out by depositing more than half-a-million dollars and taking out shares. On December 31, 1996 the BIU helped the Credit Union's bottom line even further by making a cash gift of $106,000 from its share account.

Credit Union general manager Calvin Smith said the organisation was "technically insolvent'', but cash rich, and auditors advised the gift as a means of improving the equity position.

The construction division still holds $540,893 in shares, with an understanding the funds will not be withdrawn until the Credit Union is operating profitably and has eliminated its deficit.

In 1997 the Credit Union's revenues increased 3.7 percent to $579,924, while expenses increased 23.1 percent to $503,007. Most of the increase in expenses was attributed to $100,475 increase in allowance for doubtful loans and write offs. In 1996 the organisation made an allowance of $21,718.

The Credit Union had a net allowance for doubtful loans in 1997 of $434,881, compared to $840,063 in 1996.

As at December 31, 1997 the Credit Union had cash and term deposits of $1.32 million. The organisation had assets of $4.9 million at December 31, and liabilities of $4.77 million.

Calvin Smith