LAS VEGAS — The failure of Cumorah CU, the third large Nevada credit union to go under in recent weeks, is the latest indicator that the most difficult economic environment in the country has moved here from southern California.
"Nevada is struggling mightily," said Brad Beal, president of Nevada FCU, which is feeling the impact of the state's real estate bust and the travails of the gambling industry.
State regulators took over Cumorah CU, the one-time $210-million credit union for The Church of Latter Day Saints, the Mormon Church, and assigned its member accounts to Credit Union One, the $575-million Illinois credit union.
It was the third large Nevada failure to be sold to an out-of-state credit union giant in recent weeks, following the purchase and assumption of Reno's Clearstar Financial CU by United FCU of Michigan, and of Community FCU in Las Vegas by America First CU of Utah.
The Cumorah failure came just a few days before Nevada Fed announced it was laying off about 30 employees, 10% of its workforce, after reporting a $5 million loss for the third quarter and $29.6 million loss for the first nine months of the year. Beal pointed to the state's historically high 13.5% unemployment (state by state records were not kept during the great Depression) and struggling convention business and suggested hard times will continue into the near future. "It's going to continue on," he said.
Other credit unions in Nevada are feeling the stress, as well. Silver State Schools CU, the state's largest credit union, with almost $900 million in assets, reported a loss of $35.9 million through the first three quarters of the year, and Clark County CU, the state third-largest credit union, had a $20.3 million loss for the first nine months. Both credit unions are based in Las Vegas. Carson City's Greater Nevada FCU had an $11.5 million three-quarter loss.
"Unfortunately, Nevada has been one of the four states that have seen the most difficulty," said Daniel Penrod, an analyst for the California/Nevada CU Leagues. "The run-up in (real estate) prices there was so great that they've had such a big run-down."
Nevada, he said, has been hit by the combination of the real estate bust and the effects of the global recession, which has had a profound effect on travel and tourism. Convention revenues, the state's main source of revenue, are down around 30% this year. "The loan losses, given the unemployment rate, have been pretty much expected," said Penrod.
While he predicted California may be seeing the light at the end of the tunnel, in Nevada the light is still distant. Still, several big California credit unions were reporting losses. Kinecta FCU reported a $16.2-million third-quarter loss and a $63.1-million loss for the first nine months. Kern Schools FCU reported a $4.6-million loss for the third quarter and $35.5-million three-quarter loss. Western FCU reported a $13.6-million third-quarter loss and $5.6-million three-quarter loss. Xceed Financial FCU had a $3-million loss for the quarter and $8.2-million loss for the nine months. California CU had a $5.3-million third-quarter loss and $23.9 million for the first three quarters.
Other large credit unions around the country were reporting their own losses.
Coastal FCU, in hard-hit North Carolina, reported a loss of $8.6 million for the quarter and of $43.2 million for the three quarters. "Our problems are primarily in auto loans," said Larry Wilson, president of Coastal. "North Carolina has been pretty hart hit with unemployment and job losses," he said of the state's 10.8% unemployment, one of the highest in the country.
Elsewhere, Utah's America First CU reported a $13.7-million third-quarter loss. Beehive CU, also in Utah, had a $2.7- million loss in the quarter and $8.3-million loss for the year. Suncoast Schools FCU, Florida's biggest credit union, reported an $11.1-million loss for the quarter and a $69.9-million nine-month loss. Keys FCU, the Key West, Fla., credit union taken over by NCUA last month, had a $2-million loss for the quarter and $4.4-million loss year-to-date. Tropical Financial CU, in Florida, had a $2.3-million loss for the quarter and $4.3-million three-quarters loss.
