As of June 30, New Mexico credit unions were thriving with a return on averageassets of 101 basis points according to NCUA quarterly mapping data, well above the national average of0.86% ROA.

However, the so-called fiscal cliff could curse profitabilityfor credit unions in the Land of Enchantment.

Should Congress fail to reach an agreement on the budget byyear-end, more than 200,000 New Mexico jobs could be at risk fromsequestration.

“So many of our members work for the federal governmentand with a possible sequestration staring us in the face it's veryunsettling,” said Sylvia Lyon, president/CEO of the Credit UnionAssociation of New Mexico. “Our state is very dependent on federalfunding. I just hope that Washington can balance their budgetbecause it will have a big effect on all of us in New Mexico.”

Ninety-two percent of all New Mexico credit unions boasted apositive ROA during the second quarter of 2012. Althoughthird quarter financials are available for most federally insuredcredit unions, the NCUA has not yet released its third quartermapping data.

Loans that are performing better than the national average arebehind the profitability: New Mexico's credit unions reported just0.7% delinquencies as of June 30, and an incredible 12-month loangrowth of 8.3%. In comparison, the national average fordelinquencies was 1.2% and loan growth just 3.2%.

“The loyalty rate for our credit unions goes way back,”Lyon said. “It has a lot to do with meeting member's needs andrunning the (credit unions) conservatively. They run their shopsvery well here.”

Harold Dixon, president/CEO of the $328 million State Employees Credit Union of Santa Fe, runs his shop verywell, according to his financial performance reports posted on theNCUA's website. His reported ROAA of 1.54% as of Sept. 30 issomething he said he and his staff have worked hard to achieve.

“We contribute our income to a few different factors,” he said.“ First, we have a fairly strong yield on assets. We are a truecredit union and we don't just do 'A' paper loans so our yield onloans is good from a good mix of credit members. Second, wehave a high penetration of checking accounts which provides us witha strong fee income base and third, we control expenses.”

Despite operating seven branches, expenses at SECU were just3.98% of average assets, not far above peer. Dixon also credited awell-trained and incented staff for his efficiency.

“We are able to have fewer employees that are cross trainedinstead of many 'one skill' employees,” he said.

While other credit unions struggle to get the auto loan enginehumming again, SECU's auto loan specials and cross-selling stafffueled a third quarter loan growth figure of 15.52%.

Located in the eclectic, artistic and culturally diverse capitolof Santa Fe, the 35,000-member credit union has seen cutbacks ingovernment jobs in the past three years, Dixon said, but for themost part membership has remained fairly stable.

“We look forward to a great year next year, primarily because Ibelieve that it is a great time to be a credit union,” he said.“While big banks continue to be under attack from consumers, peopleare beginning to see the value in credit unions and we willcontinue to promote this as we move into 2013.”

The $190 million Rio Grande Credit Union has consistently produced a high returnon average assets, reporting 145 basis points of profit as of Sept.30.

According to President/CEO Chris Fitzgerald, theAlbuquerque-based institution credits many factors, but said “in anutshell, we have developed a model that works with ourmembership.”

Fitzgerald said that includes pricing products appropriately,managing risk in detail, and offering exceptional service.

“We must provide value to the membership if we expect them tocontinue to use our products and services, which significantlycontributes to high ROAA,” he said.

Rio Grande's delinquency rates are equally impressive at 0.42%of total loans as of Sept. 30. However, charge offs were 1.38%,which Fitzgerald said is in line with collection strategies.

“We are very proactive in working with our collection accounts,”he said. “We find out early in the collection process if the memberwants to work with us to get current. If they do, we can be theirbiggest advocate and support them through a time of need. Ifnot, we aggressively collect and dispose of the collateral andcharge off the deficient balance to avoid bottlenecking ourcollection activities.”

The 21,000-member Rio Grande is hoping to complete a merger withthe $30 million New Mexico Central Credit Union, also located inAlbuquerque, by the end of 2012. That means a main focus for 2013will be to integrate those new members into the Rio Grande CreditUnion family, Fitzgerald said.

“In order to continue to achieve long-term success, we mustcontinue to improve our Rio Grande Credit Union model for doingbusiness and understanding that we cannot be a “one size fits all,”he said. “We need to focus on our niches and continue to strengthenthe relationship with our members by offering quality products andservices and excellent communication channels.”

Although credit unions are performing well, New Mexico's economyisn't as strong as one would think. According to the University ofNew Mexico's Bureau of Business and Economic Research, the state'sjob creation rate over the past year has placed it 46th among the50 states, and its economy is expected to sputter until at least2017.

During the 12 months that ended Aug. 31, the government sectorlost 5,800 jobs, professional and business services lost 5,700,construction was down 3,000, miscellaneous services lost 2,600jobs, and financial services lost 1,600. But, six sectors addedjobs: educational and health services added 3,000, leisure andhospitality gained 2,300, mining created 1,000 new jobs, and 900new manufacturing jobs were created. The warehousing and utilitiesand wholesale trade sectors also posted gains.