LAS VEGAS – Friday’s failure of Cumorah CU, the third Nevada credit union to fail in the past month 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 credit union for The Church of Latter Day Saints, the Mormon Church, on Friday and assigned the 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.
Nevada FCU’s Beal, who reported a $5 million loss for the third quarter and a $29.6 million three-quarter loss, predicted more hardship, based on the state’s historically high 13.5% unemployment (state by state records were not kept during the great Depression) and struggling convention business. “It’s going to continue on,” he told The Credit Union Journal Friday.
Nevada’s other large credit unions are reporting similar results. Silver States Schools CU, the state’s biggest credit union at $880 million and also based in Las Vegas, reported a $10.9 million loss for the third quarter and a $35.9 million loss for the first nine months. Clark County CU, the $600 million Las Vegas credit union, reported a $12.3 million loss at mid-year. Like Cumorah CU, both credit unions are privately insured by American Share Insurance. Officials at Silver State Schools and Clark County declined to comment. Carson City’s Greater Nevada FCU had a $4.4 million loss for the third quarter and an $11. 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 over the past few days. 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 reported 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. Keys FCU, the Key West, Fla., credit union taken over by NCUA two weeks ago, 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.
