Sand States See Long, Winding Road to Recovery: Print Preview
At the close of 2011’s second quarter, a handful of credit unions located in the sand states, where a teetering economy has made it most difficult for financial institutions to thrive, shared hopeful bits of news: net worth ratio improvements, net income increases, loan loss reductions and operating expense cutbacks.
But there’s still a long road to recovery ahead for CUs in the sand states of California, Nevada, Arizona and Florida, say several credit union CEOs based in those regions. And another state, Utah, has become the newest member of the sand state club. In February 2010, Utah League of Credit Unions President/CEO Scott Simpson declared Utah a sand state, stating it had caught up with the bankruptcies and foreclosures the original four states had suffered.
One hard hit Nevada CU in particular is the $712 million Silver State Schools Credit Union of Las Vegas, which suffered a $2.8 million loss in the first half of 2011. But President/CEO Andrew Hunter has remained positive, stating that the CU expects to restore its loss by the end of 2011 and attributing its second-quarter net loss to an increase in reserves set aside for potential loan losses.
The $1.1 billion North Island Credit Union has reported good news out of its San Diego headquarters: a year-to-date net income of $11.92 million, a net worth ratio of 6.43% and total capital, including reserves for future loan losses, of $103.3 million.
“Overall, it’s slow and steady, but it’s been a bit of a grind for a lot of credit unions,” Pearson said.
Like Nevada, Arizona is a “fabulous buyer’s market,” but purchasing foreclosed homes and short sales is a slow process, Pearson said. He added Arizona’s economy relied heavily on newcomers to the state, but the migration leveled off due to the faltering job market. He does, however, see improving conditions ahead.