Nevada’s weak economic recovery dampens credit unions’ rebound

A quarterly report released Tuesday by the National Credit Union Administration found that federally insured credit unions in Nevada rank at the bottom in a U.S. ranking of asset growth, deposit growth, loan growth and membership growth.

Of the four states or territories where credit unions’ loan balances have decreased, Nevada reported the greatest loss at minus 8.8 percent. The Virgin Islands posted a minus 6.7 percent, while Hawaii was minus 3.3 percent and Montana was minus 3.1 percent.

The Silver State’s economy is behind the weak performance.

“Fundamentally, it comes down to the fact that it’s reflective of Nevada’s very poor statewide economy,” John Worth, chief economist with the credit union administration in Alexandria, Va., said in a phone interview.

Worth said Nevada suffers from an unemployment rate of 9.7 percent, more than two percentage points above the national average (7.5 percent), and a weak housing market despite recent price gains.

The NCUA Quarterly U.S. Map Review looks at key state-level indicators, including unemployment rates and home price changes, for federally insured credit unions in the 50 states, the District of Columbia, Puerto Rico, Guam and the Virgin Islands.

Total loans outstanding grew by 4.9 percent for the year ending in the first quarter of 2013 after rising 2.2 percent during the previous year.

Idaho and Oklahoma credit unions led the nation in loan growth for the year ending March 31, according to the report. Idaho posted a 12.4 percent increase in loans, while Oklahoma credit unions reported 12.2 percent growth.

Every state except Nevada also showed asset growth during the 12-month period. Iowa at 10.4 percent had the highest rate of growth, while Nevada credit union assets declined 3.2 percent.

Nationally, annualized return on average assets at federally insured credit unions was 83 basis points in the first quarter of 2013, down from 85 basis points for the same period last year.

Nevada ranked 12th nationally with an annualized return on average assets at 91 basis points for the first quarter. Utah had the highest return on average assets at 155 basis points, while Delaware had the lowest with 26 basis points, the report found.

Worth said Nevada’s high return on average assets position was primarily a function of credit unions reducing their provisions for loan losses.

“It’s a natural thing,” he said. “At some point, credit unions need to make more on their core activity than from reducing loan loss provisions. We haven’t seen that yet.”

While return on average assets numbers was good, Nevada credit unions posted declines in annual share and deposit growth.

The 13-page report found that shares and deposits fell 4 percent in Nevada over the past year, the only state posting a decline.

On average, total shares and deposits at federally insured credit unions grew by 5.1 percent in the year ending in the first quarter of 2013, compared with a 6.7 percent rise during the previous year.

Annual membership growth rose 2.3 percent to 94.6 million members. Membership grew 2 percent in the year ending in the first quarter of 2012.

Membership declined in nine states and Washington D.C., led by Nevada’s 5.8 percent decline.

The delinquency rate in Nevada was 1.7 percent as of March 31, the report said.

“That’s not good,” Worth said. “If you walk that back a bit to 2.54 percent last year, 3.97 percent for the first quarter of 2011, 5.59 percent in the first quarter of 2010, and 6.42 percent in the first quarter of 2009, that’s a lot of recovery that has occurred.”

Worth said the delinquency numbers show “how the housing crisis exploded in the middle of their balance sheets.”

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
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