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Nov. 14, 2009
Copyright © Las Vegas Review-Journal

Credit union changes hands

Texas institution takes over insolvent Ensign Federal

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL

EDS Credit Union, a large Texas institution, on Friday took over insolvent Ensign Federal Credit Union, which served 7,900 members of The Church of Jesus Christ of Latter-day Saints.

Members of Henderson-based Ensign will not lose deposits because EDS Credit Union is assuming Ensign's deposits and loans in a transaction arranged by the National Credit Union Administration.

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    • Service will continue without interruption, said John McKechnie, the administration's director of public and congressional affairs.

    Members of Ensign now are members of EDS Credit Union with a maximum of $250,000 in federal deposit insurance each.

    "It's a very seamless transaction," McKechnie said.

    The federal agency seeks to find a "most suitable merger partner" able to provide the same kind of service, rather than focusing on geography, he said.

    EDS Credit Union "is a very up-to-date credit union that is known for its member service," McKechnie said.

    EDS Credit Union was chartered in 1974 to serve workers of the similarly named technology company founded by Ross Perot.

    An unsuccessful candidate for president, Perot sold EDS in 1984. The company now is part of Hewlett-Packard Co. and does business as HP Enterprise Services.

    Analysts describe Ensign as a victim of the continuing Nevada recession. Losses mounted at Ensign as members lost their jobs and were unable to pay back loans.

    It had $98 million in assets on Sept. 30, but its liabilities exceeded its assets, giving it negative net worth of 1.2 percent or $1.2 million, down from positive net worth of $475,000 three months earlier.

    Ensign lost $10 million in the first nine months of this year as its delinquent and charged off loans totaled $13.4 million.

    The credit union was founded in 1961. It kept a low profile in the news and did not respond to media inquiries in recent months.

    CEO Diane Whitaker was quoted saying the credit union was open to devout LDS members and non-practicing Mormons as well.

    The church did not operate the credit union, but Ensign emphasized the church in programs and advertising.

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

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    geometro wrote on November 14, 2009 09:18 PM: OH, and one more thing... this comment by the always accurate analysts (who are these people anyway)is a COMPLETE crock.

    "Analysts describe Ensign as a victim of the continuing Nevada recession. Losses mounted at Ensign as members lost their jobs and were unable to pay back loans."

    This Credit Union and many others were making REAL ESTATE DEVELPMENT loans, plus buying loans from outside their market that had been securitized and sold to them by (guess who!!!!) Wall Street. Management was greedy, and overstepped their field of knowledge. The Credit Unions were never meant to run with the big dogs, and they should have stayed on the porch.


    geometro wrote on November 14, 2009 09:07 PM: AGAIN-- for the record. Most Credit Unions have, for the most part, incompetent management or "banker wannabes" for the most part. They failed IN SPITE of the fact that they didn't even pay taxes!! The original governmental approval for Credit Unions was to "serve people of small means".. meaning car loans, small home equity lines, etc.

    The reason they FAILED, is because CONGRESS, and the REGULATORY AGENCIES allowed them to expand their field of lending. This was at the request of the Credit Unions themselves and our elected officials who didn't have the willpower to say NO NO NO because it wasn't politically expedient.

    Once the Credit Unions started making business and real estate development loans just like banks they FAILED. Plus, due to their "co-op" structure they had no access to outside capital. NONE.

    So, in conclusion, weak management, weak board oversight, weak regulatory oversight, expanded powers granted by politicians, literally no "owners", and no access to capital. They're toast. This and the many more Credit Unions you will see failing soon, is the DIRECT fault of our GOVERNMENT and YOUR elected representatives who had no stones to say NO. PERIOD....


    db wrote on November 14, 2009 12:47 PM: Is Harry Reid or family in any way involved with either this or Cumorra which was taken over a couple of weeks ago. John Ralston,you and John Ralston get on this!!


    Atheist wrote on November 14, 2009 11:13 AM: It would have been awesome had the Mormon's lost all their money, like they would have in the good old days of banking.


    Commander Cody wrote on November 14, 2009 05:57 AM: Another credit union ruined by poor management and a failed business plan.

    I wonder how many employees will lose their jobs during the takeover transition? Certainly EDS does not need to retain Ensign's accounting, collection or marketing departments. I hope they boot Ensign's CEO to the curb.