Still More Gulch Than Glitter In Las Vegas

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LAS VEGAS-Brad Beal, CEO of $693-million Nevada FCU, knows this market will pick up when the consumers visiting this vacation spot feel comfortable spending more money. The problem? "No one knows when that will happen," he said.

"That is when we will start to see a slow and gradual recovery," Beal predicted. "We don't think it will be a steep incline; we think it will be slow and erratic. There are tens of thousands of construction jobs that are gone-we used to be building two or three big casinos every year. It will take many years for those to come back. We had a super boom and now we've had a super bust."

Nevada Fed reported a $3.6-million loss through Sept. 30, down significantly from last year's three-quarter loss of $29.6 million. Beal said defaults have been leveled off. "We have had a slight improvement, but not enough to throw a party. Level is better than getting worse, and we've not had to beef up our Allowance for Loan Losses as much as last year. Last year we put in $43-million full year; this year through September, $18 million. Again, less bad."

The local economy is "stable at a very weak level, and it has been for really all of this year," Beal continued. Unemployment has remained around 14%. Gaming revenue has been steady at $850-million per month.

"Visitor numbers are strong, but they aren't spending as much money. They are taking a cooler up to their room, going to the buffet and playing quarter slots."

With homes affordable and rates low, NFCU will have a near-record $175 million inmortgages, which Beal said is "fantastic." Everything else, however, is "virtually dead."

"We have had a couple of successful promotions-an auto re-fi promotion from other lenders brought in $10 million. A prequalified Visa promo had good results, but we were more selective because that is unsecured debt."

NFCU made news earlier this year when it incented some depositors to take their savings elsewhere, which shrunk the balance sheet by approximately $100 million. The CU has added 15,000 new members in 2010, but also seen an increase in attrition. Income has held up, only to be eaten by loan losses. "For a credit union to lose one-third of its assets but still be at 9.9% net worth, our people have done a heck of a great job. I think we are going to keep doing what we have been doing next year."

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