Another LDS-Owned Credit Union In Financial Trouble: Ensign Federal Credit Union Of Henderson, Nevada Reports Insolvency

Just one week after the Nevada-based LDS-owned Cumorah Credit Union was shut down by Nevada regulators and accounts transferred to another credit union, another Nevada-based LDS-owned credit union is reported to be in financial trouble. On October 31st, 2009, the Las Vegas Review-Journal reports that Ensign Federal Credit Union is insolvent with liabilities exceeding assets.

Ensign, headquartered in Henderson, NV, serves 7,900 members of the Church of Jesus Christ of Latter-day Saints with four different branches in greater Las Vegas. 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. A September 6th LVRJ report showed that Ensign reported that 12.19 percent of its loans were delinquent at that time.

Credit union officials are being tight-lipped so far. No information about the problem is posted on Ensign's website, and multiple media calls to Ensign executives have gone unanswered. But there's no indication that the Nevada Financial Institutions Division, which seized Cumorah last week, is contemplating similar action against Ensign at this time, since Ensign is a federal credit union.

John McKechnie, the National Credit Union Administration's (NCUA) director of public and congressional affairs, sought to reassure Ensign customers. "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. 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.

Other credit unions in Nevada have also failed. Many were disproportionately invested in real estate; unfortunately, it's estimated that that two-thirds of the mortgages in Nevada are underwater. Trade publication Credit Union Journal (subscription-based) recently said Nevada has replaced California as the state with the most difficult economic environment in the country.