Spokane-based Global Credit Union posted a net loss of $3.5 million for 2008, compared with net income of $1.1 million in 2007.

Greg Benneweis, Global's vice president for finance, says the loss occurred primarily because the credit union increased its provision for loan losses by sevenfold last year, to $4.7 million, compared with $761,000 in 2007.

"In the third and fourth quarter, seeing the decline in the economy, we took much more of a defensive posture," Benneweis says. "We wanted to make sure we covered and prepared ourselves for any potential situations where greater losses could occur, and funded a substantial allowance to enhance our financial position to prepare ourselves for the bleak picture we see now."

Global had a return of minus 0.98 percent on average assets, down from 0.33 percent in 2007, Benneweis says.

"It wasn't what we had planned in the beginning of the year, but after taking into consideration those changes, it was in line with what we expected it to be," he says.

Global's total assets rose 6 percent to $365.8 million as of Dec. 31, compared with $345.3 million a year earlier. Its total deposits were $318.4 million, up 10.1 percent from $289.1 million a year earlier.

Benneweis says the dividends paid to members also rose slightly from the previous year, to $7.7 million.

"We're still trying to offer a competitive interest rate to keep our deposit growth," he says. In the second half of the year, Global introduced a high-yield checking account, which has resulted in an additional $30 million in deposits, he says.

"Most recently, in the first quarter, we have had an overall increase in demand for deposits across the board," Benneweis says. "Our belief is there is a flight to quality or a flight to security in many consumers' minds these days; they are looking for alternatives and making sure they have secure investments."

Global's total loans rose 5.8 percent, to $318 million, as of year-end, Benneweis says. Its real estate loans rose 5.2 percent to $156.2 million as of year-end, up from $147.8 million in 2007, including $41.4 million in first mortgages, up from $28 million in 2007.

Benneweis says the credit union had a significant increase in loan charge offs, in part because it had near record low charge offs the previous year. Altogether, the credit union's net loan charge offs increased 88 percent to $1.7 million, up from $1.1 million in 2007. The charge offs mostly were from consumer debt, and none were from failed mortgages, Benneweis says.

Global had a slight decline in membership of 0.18 percent. The previous year its memberships had dipped 2.34 percent. It currently employs 165 people.

Benneweis says that the credit union will hold off on adding any branches this year, and will for the time being stay on its current course of providing for potential loan losses.

"For 2009, we don't see it changing materially one way or the other. We feel we've greatly put money aside to protect ourselves in this current environment," he says.

Ed Neunherz, a senior vice president at Global, says the credit union hasn't changed its day-to-day operations or philosophy.

"Bottom line, the economy is the driver. Once we see an uptick, like all financial institutions we'll make those adjustments in response to the economy," he says.

Benneweis says that though the credit union isn't projecting as strong a growth in loans for 2009, the first couple of months have been strong, particularly with low mortgage interest rates spurring continued brisk activity.