While perhaps not as ubiquitous as death or taxes, a recent study from the Urban Institute found that more than a third of American consumers (35.1%) have debt in collections. Reasons vary from place to place and the average amount from region to region, but nonetheless the debt remains, providing both an impediment to and opportunity for credit union lending efforts.

The five credit unions below are located in the five U.S. communities with the highest percentage of residents that have debt in the collections process. While all are persevering despite the statistics, some are even thriving. Click through to learn how.

1. McAllen, Texas

With more than half its residents in collections, McAllen, Texas, has the dubious distinction of being the most indebted metropolitan area in the U.S, according to the Urban Institute. In addition, the organization reported 10.1% of McAllen residents have debt that is past due and that the average amount of collections outstanding is $4,106.

The reason for the high percentage of accounts in collections is obscure. Since the city's founding in 1904, agriculture dominated the town and region until the passage of the North American Free Trade Agreement with Canada and Mexico made the town and surrounding areas an economic hub, according to City-Data.com, a website that aggregates statistical data on U.S. metropolitan areas. Now, McAllen is one of the fastest growing cities in Texas, and according to Forbes magazine, the economic growth has fostered a burst of consumer activity.

In 2011, for example, the magazine reported that even though McAllen ranked 20^th in Texas in terms of population, it ranked 12th for overall retail sales and third for retail sales by household and individual consumer. Those statistics suggest McAllen residents might have been making purchases on credit that later slipped into collections.

Federico Castillo, president/CEO at the$46 million South Texas Federal Credit Union, said he was not surprised to learn about the high percentage of McAllen residents with accounts in collections. However, he added that would not discourage his credit union.

According to March 31 NCUA data , the latest month that contains peer comparisons, South Texas' ROAA stood at 0.41%, more than double that of its peers, while its delinquency and charge off ratios lagged its peers by roughly one third. In addition, as of June 30, South Texas was more than $103,000 in the black and moved almost $159,000 into reserves.

Castillo attributed the credit union's success to taking a team approach to lending and by not focusing on credit scores alone.

“A good score on a thin or short file might hide risks that you might not easily see,” he said, “whereas someone with an overall very solid history might have a lower credit score because of something like job loss that could have happened in the last year.”

Instead of looking only at scores, Castillo said South Texas focused more on evaluating history when looking at loan applications, along with verifying employment and pricing loans to reflect the risk.

The credit union's overall stance, Castillo said, was to look at lower score lending as an opportunity, not a risk, and to help members learn how to improve their economic lives over time.

“We focus more on the longer view,” he added.

2. Las Vegas

Las Vegas came in as the municipality with the second highest percentage of residents with accounts in collections. According to the Urban Institute, 49.2% of Las Vegas residents have debt in collections with an average of $7,246 outstanding.

While many might suppose the city's role as a gambling hub would play a role in indebtedness, the city's still sluggish economy contributes more to the problem, along with increased competition for tourism dollars from other cities. With a primarily tourism-based economy tied largely to casinos, Las Vegas has been hurt as other cities have also launched gaming operations, news outlets observed. Further, the city has still not shaken entirely free of the aftereffects of the housing bubble.

Brad Beal, CEO of the $722 million, 75,000-member One Nevada FCU acknowledged the credit union finds lending in the area a challenge. One Nevada's loan-to-share ratio stood at almost 52% at the end of June, according to NCUA data, and the credit ended the second quarter $3.2 million in the black. Its ROAA stood at 0.92% for the same period, with a delinquency ratio below 1% (0.54%), but a higher charge-off ratio of 1.67%.

Beal stressed the credit union does not pre-judge potential borrowers, but recognized that many of its members and potential members were living with some degree of credit impairment. One Nevada has seen wide acceptance of credit building credit cards as well as a checking account aimed at helping people with ChexSystems records.

“We let them know that their history need not define who they are into the future and if they want a fresh start, we are here to help them find one,” he said.

But he also expressed frustration that so many Las Vegas residents don't manage their money prudently.

“I have wondered if it's the gambling culture, the performance culture or maybe just working in the tourism industry,” he said. “But I haven't been able to figure out why so many of our residents have that challenge.”

3. Columbia, S.C.

Columbia is the capital of South Carolina, but several economic indicators suggest why it might have the third highest percentage or residents with accounts in collections, according to the Urban Institute. The Institute also reported 7.3% of Columbia residents have debt past due and that the average balance in collections is $6,416.

According to Sperling's Best Places, a website that aggregates economic, housing and demographic data from U.S. metropolitan areas, Columbia's unemployment rate is less than the national average, but so is its job growth. In addition, its sales and income taxes are higher than the national norm while individual, household, and median family incomes are lower than national averages. According to Best Places, 49.19% of Columbia households have incomes of $40,000 or less while, nationwide, only 38.41% of households have incomes of $40,000 or less.

Hansel Hart, president of the $60 million Palmetto Health Credit Union, said he was surprised to learn how many Columbians have accounts in collections. He initially protested that Palmetto Health would not be a good Columbian credit union to talk to since it has a primarily SEG-based field of membership. Nevertheless, he acknowledged that while many of the credit union's members qualified for membership because of their employment with Palmetto Health system, one of the area's largest employers, some also came from the surrounding Richland County.

“And it's always worth remembering that not all medical employees are doctors,” Hart said. “Some are nursing assistants and all the orderlies and other support staff.”

Despite the high degree of indebtedness in the overall community, Hart, who said he has not yet earned the title of CEO, leads a credit union that is posting strong numbers.

PHCU's loan-to-share ratio stood at 64.70%, as of March 31, while its delinquent loan ratio stood at 0.66%, significantly less than its peer average of 1.03%. Its charge off ratio of 0.39% also came in lower than peer at 0.46%

The credit union's ROAA was 2.22% as of the end of the first quarter 2014, and the credit union ended June more than $663,000 in the black.

Hart would not speculate on why some many Columbians had accounts in collections, but he stressed Palmetto Health strove to offer all of its members the best possible rate their level of credit risk would allow. He also said the credit union sought to lend to a broad swath of members, as suggested by an average loan yield of 7.63% compared to 5.59% for its peers.

4. Jacksonville, Fla.

Jacksonville, Fla., and its surrounding counties would not appear to be candidates for one of the top five most indebted cities, but the Urban Institute found 45% of the Northern Florida residents have debt in collections, 6.2% are behind on their bills and the average collection balance was $6,331.

According to Sperling's Best Places, Jacksonville has unemployment that is less than the national average and job growth that is faster than the national average. Nevertheless, 42% of the city's households live on $40,000 per year or less, compared with the national average of 38%.

Kathy Bonaventura, chief lending officer at the $5.2 billion, 462,000-member Vystar Credit Union, explained the credit union's broad reach across17 surrounding counties meant Vystar drew from a broad cross section of community.

“We underwrite and approve loans from across the membership,” Bonaventure said. “We lend to everyone from A+ paper to E.”

She stressed that careful, but not too restrictive, underwriting meant the credit union was able to preserve its margins while still saying yes to many borrowers.

Vystar posted an ROAA of 0.97% in March 2014, 17 percentage points above its peer group, and posted a loan-to-share ratio of 75.47%, also slightly above peer. VyStar further reported a delinquency ratio of 0.55% and charge off ratio of 0.48%, putting it close to the traditionally desired loan quality ratio of 1%..

Bonaventura said the city had been working out from under the Great Recession, and it had been going well. Now, the credit union tended to see job losses or cutbacks in available hours as among the leading enemies of maintaining loan quality, she explained.

5. Memphis, Tenn.

Memphis' role as a transportation hub has helped make the Tennessee city an ideal location for some of the nation's leading shipping companies, but this was not enough to keep it off the list of the top five most indebted cities. According to the Ur ban Institute, 44.9% of Memphis residents have debt in collections, with 6.5% owing on some bills and the average balance in collections standing at $4,707.

The city is still transitioning from an economy based largely on manufacturing, facilitated by the area's transportation networks, to one based on financial services. The city also appeared in a high position on many lists of bankruptcy filings during the Great Recession, but media reports said the BK pace had slowed.

Executives with the $544 million Orion Federal Credit Union reported that the economic environment in Memphis remains challenging, but the credit union has been working to solidly underwrite lending and still make loans. The credit union's roughly 58,000 members come from a seven-county area that borders three states: Tennessee, Mississippi and Arkansas.

The NCUA designated Orion as a low-income credit union.

Stacie Reynolds, director of support services at Orion, and Chris Anderson, vice president of lending, reported that during the Great Recession, Orion had seen more delinquency from job loss. Now, the delinquency tended to come more from unexpected events in the lives of members.

As of March of 2014, Orion's net worth ratio was slightly above that of its peers while ROAA lagged, 0.52% for Orion compared to 0.80% for the peer group.

Orion's ratio of delinquent loans to total loans remained significantly higher than of its peer group at 2.38%, but was about half of the 4.13% it had been in March of 2013. The ratio of net charged off loans to average loans also came in slightly above peer at 0.51%

As of the end of the second quarter, Orion was in the black for this year by $1.4 million.

Instant Insights /

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