Oklahoma's credit unions face challenges that sound prettyfamiliar throughout the industry: compliance burdens, low investment returns, corporate assessments and a lackluster economy.

But thankfully for credit unions in the Sooner State, the highsand lows of the real estate market felt elsewhere isn't part ofthat mix.

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That's because the state is insulated from the economicvolatility experienced on the coasts, said Gary Jones,president/CEO of the Credit Union Association of Oklahoma.

According to the Bureau of Labor Statistics, Oklahoma reportedonly a 4.7% unemployment rate for June 2012. And, online realestate database Zillow included Oklahoma City and Tulsa in a listof metropolitan areas that have experienced the smallestresidential home value decline since market peak; both cities sawhome prices drop less than 4%.

“We're very fortunate here in Oklahoma,” Jones said. “We'reexperiencing the same trends, but not quite as volatile as in otherparts of the country.”

According to NCUA key economic measures, Oklahoma is asmiddle-of-the-road financially as it is geographically: during the1^st quarter, credit unions reported 74 basis points ofROAA, 73% of credit unions in the state with positive ROAA, and1.1% delinquencies to total loans – all fairly average numberscompared with the rest of the country.

The $2.8 billion Tinker FederalCredit Union's financials are consistent with state averages,which is no surprise considering Oklahoma's largest credit unionrepresents about one-quarter of the state's total credit unionassets.

ROAA has fallen from recent years at the Oklahoma City-basedcredit union, thanks to the impact of the economy, corporateassessment, an ever-tightening spread due to low loan rates, andreduced investment earnings, said President/CEO Michael Kloiber.ROAA was 74 basis points as of June 30, down from 108 basis pointsas of 2011 year-end.

A lower-than-average net operating expense compared to peers anda strong collections team has kept Tinker in the black withouthaving to resort to increasing fee income.

“Improving our ROA by increasing fees and charges is anadjustment of last resort since it would significantly andnegatively affect our membership,” Kloiber said.

Kloiber added Tinker's June 30 0.95% delinquency ratio is thelowest the credit union has seen in three years.

South of Tulsa in Henryetta, Okla., the $44 million First FamilyFCU is quietly bucking the trend of struggling small credit unions.In fact, President/CEO David Dykes said his credit union's 127basis points of ROAA as of June 30 is down from more than 200 basispoints during the same period last year.

He said the credit union is facing some challenges this year,but last year's 200-plus ROAA was the result of an “unbelievable”year in which “charge-offs were low and everything that could goright, did.”

Charge offs and delinquent loans have each run around 1% so farthis year, a reflection of First Family's low-income status and thechallenges that come with serving low-income communities. InOklahoma, Dykes said that includes the lure of casino gambling; theWorld Casino Directory ranks Oklahoma the #5 state in the countryfor the number of casinos, with 86.

Expansion has also cut into First Family's ROAA, as the creditunion prepares to open its third branch. Branch employees have been training in the main officefor the past few months without having the financial offset ofbranch income.

Oklahoma did stand out in one enviable category, loan growth,with an 8.2% 12-month figure that is among the best in thecountry.

Tinker is experiencing positive loan growth, but growth in 2012has been slow compared to past years, Kloiber. The credit unionreported 3.68% growth as of the second quarter, but that figure isdown from 5.51% during the same period last year, and year-endgrowth of around 20% in 2010 and 2009.

Indirect auto loans are still providing growth for Tinker,Kloiber said, as are quarterly pre-approved mailings tomembers.

“We have continued to see success with that program throughoutthe recession,” he said.

Loan demand has been “excellent” at First Family, Dykes said.First Family reported nearly 10% loan growth as of June 30, whichDykes said is fueled by consumer lending.

“Our niche is consumer loans – cars, boats, travel trailers,lawn mowers, everything you get in the consumer field and I thinkthat helps us,” he said. In fact, Dykes added that despite a lowrate environment in the consumer market, First Family hasn't had todiscount rates as others have to keep up loan demand.

Despite the LICUdesignation, First Family doesn't make business loans, nor doesthe credit union keep residential mortgages on its books. Still,loan to shares is very high – 87.82% as of June 30, which is downfrom a peak of 97% in Sept. 2010.

As a result of the large loan portfolio, investment earnings arelow because Dykes has to keep his remaining assets in relativelyliquid, short term investments like certificates with terms of lessthan six months. However, the credit union's nearly 8% loan yieldas of June 30 more than makes up for its 1.10% investment yield,which while low, is only 28 basis points below peer averages.

Despite the relatively strong economy and good numbers, Oklahomacredit unions have not escaped the increasing regulatory burden,Jones said.

“They're having to deploy resources to compliance that theywould otherwise use for growing their business,” he said. “Somehave hired for compliance, others have outsourced and for everyone,it requires more time from senior management to deal with thoseissues. It takes your eye off the ball.”