Ensign Federal Credit Union reports that it has become insolvent

Ensign Federal Credit Union of Henderson, which serves 7,900 members of the Church of Jesus Christ of Latter-day Saints, is reporting that it is insolvent with liabilities exceeding assets.

Chief Executive Diane Whitaker didn't respond to three calls for comment Friday. Other attempts to reach Ensign executives failed.

"The (National Credit Union Administration) is aware of the difficulties in Nevada and is closely supervising Ensign FCU with the goal that Ensign members continue to receive credit union services," said John McKechnie, the administration's director of public and congressional affairs.

"The credit union members should also know that their funds are insured up to at least $250,000 per account and are backed by the full faith and credit of the federal government," he said.

Financial industry analysts said it is unusual for the federal government to allow an insolvent institution to continue operating. McKechnie, however, said the administration was not planning to take any action on Friday against Ensign.

In a third-quarter report to the federal agency, Ensign reported that its net worth was a negative 1.21 percent. The $98.2 million asset credit union reported a shortfall of $1.2 million, down from a net worth of $475,000 in the second quarter.

The credit union lost $10 million in the first nine months of this year, as its delinquent and charged-off loans totaled $13.4 million.

Other Nevada credit unions are also suffering from huge losses.

Trade publication Credit Union Journal on Sunday said Nevada has replaced California as the state with "the most difficult economic environment in the country."

The Financial Institutions Division shut down Clearstar Financial Credit Union of Reno in late September. United Federal Credit Union of Michigan took over Clearstar's deposits.

America First Credit Union of Utah took over Community One Federal Credit Union of Las Vegas in August.

A week ago, the Nevada Financial Institutions Division seized Cumorah Credit Union, a privately insured credit union that served 15,000 members of the Mormon church. Cumorah members' accounts were transferred to Credit Union 1 of Rantoul, Ill., and American Share Insurance of Dublin, Ohio, absorbed its losses.

Financial industry insiders are becoming increasingly concerned about whether any nonfederal entity can withstand a continuing wave of credit union failures.

In a blog on Wednesday, Keith Leggett, senior economist at the American Bankers Association, wondered how much risk Silver State Schools Credit Union posed for American Share Insurance.

Leggett estimated that two-thirds of the mortgages in Nevada are underwater. The economist pointed out that Silver State, which relies on American Share for deposit insurance, has $501 million of its $771 million loan portfolio in real estate loans.

Silver State is the largest credit union insured by American Share.

Silver State CEO David Rhamy said he had not seen the comment but said he is "absolutely confident" in the ability of American Share to back up members' deposits.

Homeowners with mortgages from Silver State typically had equity of 20 to 30 percent, Rhamy said. Even with a drop of 40 to 50 percent in home values, "we're looking at a 20 to 30 percent maximum loss on these dollars," Rhamy said.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.