By Vernon Robison

Moapa Valley Progress

The struggling area economy caught up with the Moapa Valley Federal Credit Union (MVFCU) in 2010 bringing significant challenges to the 6,900 member local financial institution. According to a report given at the MVFCU annual membership meeting on Thursday, the credit union has seen sharp declines in member loans and in assets; with member deposits staying essentially flat. This, along with tightening federal regulations on financial institution has brought significant losses to the MVFCU during the past year.

But MVFCU officials assured the handful of members in attendance at Thursday’s meeting that, despite all of this, the institution is still on firm footing.

“The way I feel about year 2010 is that I’m glad to have it over,” said MVFCU Board Chairman Richard Jones. “Fortunately, the credit union has worked for the past 50 years to get into a position to weather this storm. Many credit unions that were less prepared have fallen victim to the downturn. But they didn’t have the capital that we have had to get us through.”

A report of financial highlights presented by MVFCU General Manager Doug Schwartz indicated that the credit union sustained losses of $2.8 million in 2010. But Schwartz pointed out that much of this was because federal regulators had required the institution to hold $2.6 million in reserve in case of future loan losses.

“The regulators have been very tough on Nevada credit unions,” Schwartz said. “They said that they saw potential risks in our loan pool and have required us to carry a very high reserve.”

Despite this, the MVFCU has fared well over the past year compared to many other similar institutions, Schwartz said.

“We ended the year with a capital ratio of 8.82%,” Schwartz said. “That is twice the level of most credit unions in the state that have had to close their doors or are struggling. I feel grateful that we have put money aside over the past 53 years of the credit union’s history that has prepared us for this rainy day.”

Schwartz said that the significant challenges faced by the rank and file MVFCU membership has weighed heavily on the credit union and its administrators over the past year. He pointed to unprecedented levels of unemployment and the extended sharp decline in real estate market values as key examples.

The MVFCU has $30 million in mortgage loans which amounts to about 290 loans, Schwartz said. In the past year the institution has charged off $1.1 million in loan defaults, Schwartz said.

“I have been at the credit union for 17 years now,” Schwartz said. “For my first fifteen years there was not one foreclosure; not one. But in the last two years we have taken 15 pieces of property back in foreclosures.”

But Schwartz emphasized that the credit union was in a unique position to work with customers with trouble making payments on loans.

“We own and service all of these loans,” Schwartz said. “So we have a lot of flexibility to work with people. We can do a lot when people come in and want to work with us. We have extended terms on loans, lowered interest rates, and even set up interest only payments for a time while people get back on their feet. We don’t ever turn people away that come to us needing help.”

Jones added that, though the challenges of the MVFCU are significant, the way forward is clear. “Who is going to see us through this?” he asked. “Well we had people from the NCUA (federal regulatory agency for credit unions) here for a month this year looking over our books and I can say that they aren’t going to be the ones to get us through this. It is the strength of our membership working together that will do it.”

Jones said that there is a perception in the public that institutions are not currently loaning out money. “We want our membership to know that we are willing to make loans to help take care of their needs and face their challenges,” he said.

Schwartz concluded by saying that the “take-away message” from the meeting ought to be that the MVFCU is still “safe and sound”.

“Are there challenges ahead? Yes,” he said. “I’d be lying to you if I told you anything different. But the credit union has used sound judgment for 53 years now that has prepared it for this rainy day and we are still standing strong because of it.”