When comparing Nevada credit unions' key financial indicatorsagainst other states as of June 30, the results aren't good.Nevada's 0.40% return on average assets, 2.5% loan delinquency andnegative 11% loan growth are among the worst performance numbers inthe country. However, compared with two years ago, those numbersare positive proof the recession didn't permanently tarnish creditunions in the Silver State.

Take the $693 million One Nevada Credit Union, for example. The Las Vegas-basedinstitution reported an ROA of 0.17% as of June 30. That number isa far cry from the previous industry standard of 100 basis points,but as President/CEO Brad Beal said, “At least it's in theblack.”

Just two years ago, the One Nevada's second-quarter numbersincluded negative 0.73% ROA, a 4.95% loan delinquency figure and a5.66% charge-off ratio. Charge-offs were still around 4% as of June30, but delinquencies have fallen to 2.51%, on pace with the stateaverage.

Although the tourism-based Nevada economy is still weak, it hasstabilized, Beal said. And, One Nevada has worked its way throughthe bad loans in its portfolio and is left with relativelyhigh-quality loans.

“In terms of ROA, we're putting away less in provisions for loanlosses,” Beal said. Although the credit union's $6.6 millionyear-to-date June 30 loan-loss provision is “pretty heavy,” he saidit's $2 million lower than the $8.6 million it had set aside oneyear prior. And, both numbers pale in comparison to the $23.7million the then-Nevada FCU put into loan-loss provisions as ofJune 30, 2009.

Nevada Credit Union League Chief Economist Dwight Johnston saidconsidering what Nevada credit unions have been through, they'veweathered the storm well.

“The thing that jumps out to me are capital ratios,” Johnstonsaid. He noted that some large, struggling credit unions havedistorted the average, but statewide Nevada credit unions reportedaround 11% net worth as of June 30.

“That's pretty close, historically, to what they've always run,”he said, “and that speaks well to how they've managed throughit.”

There's still work to be done managing through the recession in Nevada, Johnston said, because constructionprovided such an economic boost in the state, and the sector won'treturn to the levels seen in the boom years.

However, he said, the worst has passed. Most credit unions inNevada, like One Nevada, have worked their way through the weaklinks in the loan portfolio and can look forward to less aggressiveloan-loss reserves in the future. Investors are buying up thestate's glut of foreclosed homes, although the economist said he'sconcerned the new owners won't gain the cash flow they're expectingfrom renters.

Online retailers, including Amazon and Zappos, have facilitiesin Las Vegas and are supplying jobs. However, those positionsaren't well-suited for the throngs of construction workers thatmake up the state's current 12% unemployment rate.

“Talk about a retraining effort,” Johnston said, noting that LasVegas may see a continued decline in population.

Occupancy rates for hotels on The Strip are high, Beal said,running in the 90% range. However, tourism has not completelybounced back because tourists aren't spending nearly as much oncethey arrive in Las Vegas.

Members aren't spending money either. Nevada's negative 11%12-month loan growth is the worst in the country. One Nevadareported negative 8% loan growth as of June 30, as members havelittle demand for new consumer loans, and the credit union hit itsbusinessloan cap when it shrunk its assets.

“We haven't made any business loans for a couple of years now,”Beal said, noting that investors are snapping up commercial realestate at historically low prices. “We would make those loans if wehad the room to do so, but we would be pretty selective aboutit.”

The only lending action One Nevada is seeing these days isin  refinancing auto and mortgage loans.

“We're kind of recycling the existing business out there sincethere's not much new business,” Beal said, “but it has given us theopportunity to attract some new members.”

Since the federal government's Home Affordable Refinance Programeliminated loan-to-value limits last fall, One Nevada has beenburied in HARP 2.0 refinance applications, Beal said.

“We've done almost $60 million in HARP refis in the last twomonths, compared to about $150 million during all of last year,”Beal said. “HARP 2.0 has been extremely good for homeowners inNevada and our credit union.”

HARP 2.0 has been so popular in Nevada, Beal said that after twoweeks marketing mortgage refis, the credit union stopped pitchingthe program.

“At some point, we will reinstitute some marketing for itbecause some consumers are still unaware of their options. But forthe moment, we aren't doing any marketing at all and still writingthat stuff like crazy,” Beal said.

The credit union isn't keeping any of the refinanced mortgageson its balance sheet, selling them all to Fannie Mae but earningnoninterest income off the deals, he said.

Elko, Nev., located in the northeast corner of the state, hasbeen relatively immune from the economic downfall suffered in thepopulation centers of Las Vegas and Reno. In fact, according toElko Federal Credit Union President/CEO Kelly Buckner, the miningcommunity is experiencing an economic boom thanks to record highgold prices.

The area is largest producer of gold in the country, and one ofthe top four in the world, he said. The gold boom has had a bigimpact on the $117 million credit union's financials, which buckthe statewide trend. As of June 30, EFCU reported 0.32%delinquencies to total loans, and a jaw-dropping low 0.06%charge-off ratio. ROA was 0.73%, and net worth, market share,membership and deposits are all growing at a healthy pace so farthis year.

However, like everywhere else in the country, Buckner said he'shaving difficulty making new loans. EFCU reported a negative 5.74%loan growth rate as of June 30 and continues to battle a shrinkingloan-to-share ratio.

With an eye toward the future, Buckner said EFCU is currentlyinvestigating its options to start making member business loansafter receiving “a lot of requests from members who own smallbusinesses, need financing and know the credit union can provide itsafely and soundly.” 

EFCU also recently signed on with CU Direct Lending, he said,hoping the partnership will generate more auto loan business.