The Logandale branch of the Moapa Valley Federal Credit Union in Wally’s Plaza will be closing on July 29 after being open for 12 years at the location. Photo by Vernon Robison.

By Vernon Robison

Moapa Valley Progress

The Board of Directors of the Moapa Valley Federal Credit Union (MVFCU) announced last week that it would be suspending operations at the MVFCU Logandale Branch effective July 29. The Overton and Lincoln County Branches will remain open and available to serve Credit Union members.

The Logandale branch office, which has been open in the Wally’s Plaza since 1999, employs five staff members and processes 180-300 transactions a day, according to MVFCU President Doug Schwartz.

The five Logandale branch staff members have been notified that their jobs will end when the branch closes, Schwartz said.

The action is part of an ongoing plan to reduce expenses and bring the Credit Union back to profitability, Schwartz said. This overall plan is in response to instructions from the National Credit Union Administration (NCUA), the regulatory agency governing credit unions.

“We have been as honest and transparent as we can with people,” Schwartz said. “We have disclosed that we lost money in 2009 and we had a very tough year last year, too. Our regulatory agency has told us that we need to do whatever we can to return to profitability. This (closure) is not the end result of our action plan but it is a huge component of it in shoring up the credit union.”

The economic downturn has had a significant impact on the Credit Union’s membership. Schwartz said that the economic impact, coupled with the substantial decline in the real estate market has caused loan losses to skyrocket.

“Credit Union members, who have always paid their loans in a timely manner, find themselves without jobs and the ability to repay loans,” Schwartz said. “Plus we have some situations that we call strategic defaults, where people who are underwater in their homes just walk away.”

By the end of the year, Schwartz expects that the credit union will own as many as 20 foreclosed homes or pieces of property. While the credit union would like to sell these properties quickly to get them off the books, there is very little market for real estate in the area, Schwartz said.

“We have ended up renting some of them, which is not our normal practice,” he said. “Otherwise we just try to keep them up and ready to sell as best we can.”

The income from member loans has also decreased sharply since 2008. According to current projections through the end of 2011, that annual income has dropped by $1 million.

In addition, the number of new loans the Credit Union makes on a monthly basis has dropped from 120 loans down to 40 loans. “So we are not getting the new loans to replace the old,” Schwartz said.

Schwartz stated that MVCU Board and staff hope members will understand the decision and work with the Credit Union to insure its future.

“The Credit Union continues to be a safe and secure financial institution,” he said. “In these tough times, we’ve seen a lot of small credit unions close shop and merge with larger institutions. We were in a stronger spot; we had more capital and were in a better position. So we are still hanging in there.”

All member deposits are insured by the National Credit Union Administration, an agency of the federal government.

Schwartz said he would like to say he can see light at the end of the tunnel for the regional economy but he can’t quite yet. “I try to stay as optimistic as I can but the realities are there,” he said. “These types of things are gut wrenching to me and others involved. It just tears you apart when you have to tell people that you don’t have a job for them anymore. Unfortunately, extreme times require extreme measures.”

It is uncertain when the Logandale branch of the MVFCU will reopen. The MVFCU still owns property in Logandale and Moapa that has been targeted for branch offices. But there are no current plans to build at either location.

“We look forward to the time when branches can be opened to serve the members in each of those areas,” Schwartz said.