One Nevada Credit Union sets asides millions in loan loss reserves

As the Nevada economy continues to languish, with no clear signs of either improvement or further deterioration, One Nevada Credit Union continues to set aside millions of dollars in loan loss reserves as a precaution against another economic downturn in the real estate market.

The Las Vegas-based credit union has set aside $12.25 million in 2011 to cover any future defaults or other problems in its outstanding loan portfolio valued at $372.4 million.

That decision has affected the company's profitability for the last six months of the year.

One Nevada officials on Tuesday reported a $460,941 loss for the third quarter, compared with a loss of $2.1 million in the second quarter.

The credit union earned $157,672 in the first quarter of 2011.

The third-quarter loss was attributed to $3.62 million being set aside for loan loss provisions and a $701,231 premium paid to the Federal Deposit Insurance Corp.'s insurance fund.

For the first nine months of 2011, One Nevada has set aside $12.25 million for loan-loss reserves, along with paying $1.45 million in insurance premiums.

One Nevada reported a loss of $2.7 million for the first nine months of 2011 because of additional set-asides for loan losses and insurance payments.

"We are being conservative and careful by setting aside additional resources," said Brad Beal, president and CEO of One Nevada Credit Union. "Every time the real estate market ticks down a bit, we set aside more for loan losses."

Without the two set-asides, One Nevada would have earned $10.9 million for the first nine months of 2011, according to the credit union's third-quarter financial report.

"We've also continued our efforts to serve the membership, with over $81 million in new mortgages and $32 million in consumer loans provided to members this year," Beal wrote in a letter sent to the credit union's members.

"Also, during the first three quarters of the year, nearly 9,000 new members joined One Nevada," he wrote.

In a phone interview, Beal said membership was up about 40 percent in October.

"The timing is interesting," he said. "I can't attribute it to anything. We haven't really marketed One Nevada."

One Nevada's recent membership gains could be the result of changes to its business model or angry Wells Fargo Bank and Bank of America customers looking to avoid monthly debit card fees.

In January, Bank of America will impose a $5 monthly fee for using debit cards for retail purchases, while Wells Fargo is already testing a $3 monthly debit card fee in Nevada and four other states.

Meanwhile, during the third quarter, members approved Nevada One's conversion from a federal credit union to a state-chartered institution .

Federal credit unions organize themselves around federal regulations, while state-chartered institutions follow the state's banking laws, according to the National Credit Union Association.

As of Sept. 30, the credit union listed $685.2 million in total assets.

One Nevada operates 23 branches that serve about 81,000 members.

The credit union now serves Clark, Washoe and Nye counties.

In the past, One Nevada had served all of Clark County, but had been restricted to small, inner-city areas of Reno, Sparks and Pahrump.

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