One Las Vegas CU Sees Some Good News In Trends
LAS VEGAS-As is the case with many credit unions across the country, posting lower losses in the third quarter of this year over previous quarters was not a reason to celebrate, but for Clark County CU, it was still worth noting.
Wayne Tew, CCCU's president and CEO, said the credit union posted its smallest quarterly loss in a long time in Q3, $826,000.
"We don't like the negative number but we like the trending," he said. "Our year-to-date loss through Sept. 30 was $4.9 million, which compares to $25 million in 2009, so we think $4.9 million is pretty good.
"In 2011 we expect to turn a little bit of a profit," he added.
Clark County CU's net worth was 6.53% as of the end of September, which is up slightly from earlier months.
One factor that is helping turn around the numbers is delinquency, now half of what it was six months ago. "I really think we have seen the worst of it."
He said management remains cautious, however, and is maintaining a high Allowance for Loan Losses due to recent historical loan losses and because it believes there is market value risk still buried in real estate loans that are performing.
Economic conditions in the Las Vegas are "not improving but they do not seem to be getting worse," said Tew. Visitors are still coming to Glitter Gulch, but a similar upbeat outlook can not be said of the construction industry.
"We are probably about five years away from any recovery, because we have so much volume available, including both commercial property and residential. There will not be the boom growth that Las Vegas has become accustomed to, it will be more gradual."
Weak Loan Demand
Loan demand is "very weak," Tew said, noting CCCU's loan portfolio is shrinking 1% to 2% per month.
The upside, he said, is in a difficult market and when attempting to maintain a positive net worth ratio, it is best to shrink.
"We have being shrinking both sides of the balance sheet quite effectively the past two years. We peaked at $650-million in assets in May 2008; we are at $500-million now. We would like to have more loans on the books but right now it is not happening. We don't expect more until budgets stabilize because we deal with municipal government employees."
To boost lending, Clark County CU this month adjusted its rates downward to reflect what is happening in the economy. Tew said there is "fierce competition out there" for the few good loans.
As what lessons have been learned during 2010 that will be applied to 2011 Tew observed, "Members not paying their loans. I don't mean to be flippant, but we are hoping that will change for next year."
In the first week of November CCCU closed two branches in Las Vegas. One had declining transaction volume over the last six years, the other was opened just before the downturn hit and it "never really got traction," Tew said.
"Given where we are right now, it made sense to cut. At the beginning of the year we let a few people go because things were so slow and we stopped making 401(k) contributions. This is the market we are in. When people ask how we are doing I say, 'We're still open.'"