SAN FRANCISCO-Credit unions from the Golden and Silver States will be meeting here this week, with a backdrop of two state economies generating neither much gold nor much silver.
It wasn't that long ago credit union leaders were relishing the economic boom, especially in Nevada. Now, many of those same CUs are reporting losses. For instance, the $7.8-billion SchoolsFirst Federal Credit Union in Santa Ana, formerly known as Orange County Teachers FCU, plunged into the red for the first time in its 23-year history, reporting a loss of $28.7 million. The $1-billion Arrowhead Central Credit Union in San Bernardino alsoreported its first loss, $6.6 million.
Daniel Penrod, a research analyst for the California Credit Union League, said credit unions suffering the most are those in areas where home prices have fallen fastest.
"The areas that are seeing the largest negative impact are those that saw the highest positive impact during the boom," he said, including California, Las Vegas, Florida and Arizona. "I see this trend continuing through the end of the year and into next year, before it finds an equilibrium."
The $167-million Clearstar Financial Federal Credit Union in Reno lost $3 million in the third quarter, and the $161 million-asset Community One Financial Federal Credit Union in Las Vegas lost $600,000.
The states are leading the country when it comes to foreclosures, with one-in-every 82 homes in Nevada in foreclosure and one in every 189 California homes in the same straits.
Facing The Challenge
This week, with credit union leaders from both states gathering for the California and Nevada CU Leagues' Annual Meeting and Convention, CU Journal asked CU leaders in the two states a simple, yet complex question: What is it like running a credit union in your state these days?
Darren Williams, CEO of $3.6 billion Wescom CU, which serves 315,000 members throughout Southern California from its Pasadena headquarters, spoke for many when he replied with a wry chuckle, "These are exciting times. Not necessarily fun, but definitely exciting."
Brad Beal, CEO of Las Vegas-based Nevada FCU, cited foreclosures and the decline of the once red-hot Vegas housing market as the biggest problems his credit union and its members are facing.
"It is challenging, it is difficult, obviously, but it also is rewarding in some ways," he said. "There are a lot of interesting opportunities out there."
Not surprisingly, many respondents referred often to "challenging" and "challenges"-but "opportunity" also came up a number of times as credit union leaders are looking for ways to not only step up to the plate to help members but also make significant inroads into marketshare.
No Bottom Yet?
When asked to evaluate if economic conditions in the Sacramento, Calif., area had hit bottom or still were worsening, Teresa Halleck, CEO of The Golden 1 CU, offered a gloomy picture: "From my perspective, economic conditions in California continue to worsen," she said. "Housing devaluation is significant and not yet over, select auto dealers have closed, some restaurants struggle and a few have closed, layoffs continue, retail sales are down, tradesmen and related businesses have significantly less income since new home construction and home improvements are substantially down and in some instances stalled, and consumers are generally uncertain and fearful about the future as well as their personal economic stability."
Looking ahead, Tony Mook, CEO of Cumorah CU, said things in Las Vegas aren't nearly as bright as the neon lights of the Strip casinos. "I'd guess we're still a few months from a bottom here, and I don't see a sharp recovery either," he appraised. "I'd say we're in for a prolonged bottom as things sort out, with a very slow recovery later next year as the bailout package and additional economic stimulus incentives finally impact the economy."
Offering a ray of hope was Bill Cheney, CEO of the California and Nevada Credit Union Leagues, who said this year's convention "is well-timed to address the current economic and political challenges the nation is facing. We have scheduled expert speakers on these key topics to provide credit union leaders with important information they will need in making decisions that support their continued growth in serving members."
