LAS VEGAS-With many CUs across the country awash in red ink, Nevada FCU is one of the bright spots with positive ROA and net income, despite its being located in one of the hardest hit states in the nation.
Below, Brad Beal, CEO of the $826-million NFCU, offers his insights:
CUJ: What is it like to run a credit union in Nevada these days?
Beal: It is challenging; it is difficult, obviously, but it also is rewarding in some ways. There are a lot of interesting opportunities out there.
CUJ: What are the biggest challenges?
Beal: Foreclosures and the decline in the housing market are the biggest, along with the fact many people have lost their jobs or had their hours reduced. Those factors combine to make the biggest challenge. It is difficult to watch people lose their homes.
CUJ: What direct and/or indirect effects is your CU feeling from the housing market?
Beal: We have about two dozen houses in foreclosure, and seem to be adding about three or four every month. These are not subprime loans, they were people with "A" credit, but they have lost their jobs or had their hours reduced, or their spouse has lost their job, and they are unable to meet their obligations.
We have done payment extensions, we put some loans on interest only for some time, anything we can to help. Unfortunately, in many cases the balance on the loan exceeds the value of the home, which limits what we can do for them.
If there is any light at the end of the tunnel, such as if there is hope for future employment, we will extend payment. But in many cases people have lost their jobs and there is little hope. It is not isolated in one industry-many casinos have laid off employees, and construction is slow.
CUJ: Are economic conditions in your market still worsening, or have things already hit bottom and are improving?
Beal: It seems like things are getting worse. We continue to see layoffs and members are having their hours reduced. The unemployment number released today [Oct. 21] was up to 7.3%, from 7.1% last month. Some people think it might exceed 8% by next year, I don't know if that is true or not.
CUJ: Have the failures of IndyMac and WaMu allowed you to gain members and/or deposits?
Beal: Very little. A handful, but nothing significant. IndyMac doesn't have much of a presence here, although we did get some deposits from their customers. WaMu has a significant presence, but we haven't gotten much.
CUJ: Describe your lending, deposit growth?
Beal: Our deposits are down as a lot of people need money right now. Lending is going well, which is rewarding, particularly our residential lending. Homes are affordable again in Las Vegas, meaning people who couldn't afford to buy a home last year can afford to again. We are going to have a record for number of mortgages we book in 2008. It won't be a record in dollars, though, because the loan amounts are down.
Besides real estate loans, we are helping members with payday loan alternatives, which also is rewarding because we can do it for a lot less than payday lenders charge. Our auto loan business is up a little bit, largely because a number of competitors have exited the market.
One of the most positive things I have seen is our staff is bonding together. People are closing ranks and bonding together to help our members get through this adversity together. It is really rewarding to see this. We've asked them to make some sacrifices-we cancelled our holiday party and have scaled back on tuition reimbursements and our scholarship program, and we will be scaling back on pay increases next year. We are looking for expenses to cut.
One thing we are scaling up is IT. We are expanding signature pad technology because it will save us money on paper and storage. Members will be able to sign a pad instead of papers.
Profitability still is pretty good. We want to protect everyone's job. Our ROA is running about 0.45%, and our net income through September is right about $3 million, and we feel very fortunate for that.
