By CLAUDE R. MARX
and JIM RUBENSTEIN
The impact of the recession on Nevada's already battered economywas again evident when the NCUA closed Ensign Federal Credit Unionand authorized EDS Credit Union to buy its shares and assets.
Ensign's latest financial report, which covers the third quarter,showed a net worth ratio of negative 1.21% and equity of negative$1.1 million.
The 7,900-member Henderson, Nev.-based credit union saw its assetsfall by $23.5 million during 2009, from $121.5 million to $98million. During the third quarter, its loan income declined 3% andits investment income fell 26.7%. According to the report thecredit union filed with the NCUA, 13.6% of its loans weredelinquent at the end of September, up from 6.27% in September2008.
Ensign FCU, the fourth credit union to close in Nevada this yearbecause of the recession, was founded in 1961 to serve members ofthe Church of Jesus Christ of Latter Day Saints. In 2009, 13federally insured credit unions have been liquidated so far.
EDS CU, based in Plano, Texas, has $772 million in assets.
Kent Lugrand, the president/CEO of the credit union said the dealfits well into a long-term branding strategy of employing the newlyminted “InTouch” name as EDS pursues “a national trademark whichwe've applied for” with federal agencies last year.
He added that Ensign's “brand charter” was very much in alignmentwith that of EDS' and the credit union chose to acquire Ensignbecause it fits with EDS' geographic diversificationstrategy.
EDS CU, originally formed by employees of Ross Perot's oldElectronic Data Systems (now owned by Hewlett Packard Corp.) hasmembers in all 50 states, giving it a national footprint for the“InTouch” brand, said Lugrand. He said he hopes to win approval forthe InTouch name from the Texas Credit Union Department by year-endand then await later trademark clearance from the U.S. PatentOffice.
EDS CU has 66,000 members and 15 branches. It plans to keep all ofEnsign's employees and branches and even plans to reopen an Ensignbranch in Las Vegas that was closed last summer.
In comments made to Credit Union Times, Lugrand noted that EDS hasmore than $66 million in capital, earned $5.6 million in net incomethrough the first three quarters of 2009 and forecast its 8%capital ratio “should remain” at that level after the Ensignacquisition.
Lugrand said his credit union was approached by the NCUA last Julyand suspected “there were perhaps more than half a dozen otherbidders, though I don't know for sure.”
The NCUA declined to discuss details of the negotiations.
In a message on the EDS Web site (edscu.org), outgoing Ensign CEODiane Whitaker said the credit union faced daunting challenges inthe local economy, “including the dramatic decrease in home valuesand negative impact of unemployment” reported most recently astopping 15%.
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