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Oct. 31, 2009
Copyright © Las Vegas Review-Journal

Ensign Federal Credit Union reports that it has become insolvent

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL

Ensign Federal Credit Union of Henderson, which serves 7,900 members of the Church of Jesus Christ of Latter-day Saints, is reporting that it is insolvent with liabilities exceeding assets.

Chief Executive Diane Whitaker didn't respond to three calls for comment Friday. Other attempts to reach Ensign executives failed.

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    • "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," said John McKechnie, the administration's director of public and congressional affairs.

    "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.

    Financial industry analysts said it is unusual for the federal government to allow an insolvent institution to continue operating. McKechnie, however, said the administration was not planning to take any action on Friday against Ensign.

    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.

    Other Nevada credit unions are also suffering from huge losses.

    Trade publication Credit Union Journal on Sunday said Nevada has replaced California as the state with "the most difficult economic environment in the country."

    The Financial Institutions Division shut down Clearstar Financial Credit Union of Reno in late September. United Federal Credit Union of Michigan took over Clearstar's deposits.

    America First Credit Union of Utah took over Community One Federal Credit Union of Las Vegas in August.

    A week ago, the Nevada Financial Institutions Division seized Cumorah Credit Union, a privately insured credit union that served 15,000 members of the Mormon church. Cumorah members' accounts were transferred to Credit Union 1 of Rantoul, Ill., and American Share Insurance of Dublin, Ohio, absorbed its losses.

    Financial industry insiders are becoming increasingly concerned about whether any nonfederal entity can withstand a continuing wave of credit union failures.

    In a blog on Wednesday, Keith Leggett, senior economist at the American Bankers Association, wondered how much risk Silver State Schools Credit Union posed for American Share Insurance.

    Leggett estimated that two-thirds of the mortgages in Nevada are underwater. The economist pointed out that Silver State, which relies on American Share for deposit insurance, has $501 million of its $771 million loan portfolio in real estate loans.

    Silver State is the largest credit union insured by American Share.

    Silver State CEO David Rhamy said he had not seen the comment but said he is "absolutely confident" in the ability of American Share to back up members' deposits.

    Homeowners with mortgages from Silver State typically had equity of 20 to 30 percent, Rhamy said. Even with a drop of 40 to 50 percent in home values, "we're looking at a 20 to 30 percent maximum loss on these dollars," Rhamy said.

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

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    SlanderIsNotGood wrote on November 04, 2009 11:51 AM: What I don't understand is why the writer of this article was not smart enough to realize that most financial institutions were closed on Friday for Nevada day. How dumb is that?!?


    Gabby wrote on November 03, 2009 04:46 PM: Ensign Federal Credit Union is NOT owned, operated or funded by the LDS church. The membership is open to LDS people because back in the day, some LDS people thought, "Hey wouldn't it be nice to have a credit union among the LDS community." The church has NOTHING to do with Cumorah or Ensign. Period. People should get their facts straight before they go around slandering and blaming people and organizations.


    Unbelievable... wrote on November 02, 2009 09:00 PM: It is beyond belief that this credit union is allowed to continue operations!!!! If the management teams of these failed credit unions hadn't been so greedy when times were good, they wouldn't be in this mess!! I thought credit unions were suppose to be conservative with members' money!!! National Credit Union Administration, shut this place down already!!!


    Josh wrote on November 02, 2009 01:41 PM: j


    Simon wrote on October 31, 2009 11:11 PM: I have had an account at Ensign FCU since I was five years old and I'm proud to be a member - They are federally insured so what's the big deal? They have been a great credit union for me and my family.

    That's just too bad that people bail out on their promises to pay. Other financial institutions have experienced losses and its not just the Mormom credit unions.

    What will John G. Edwards write about after the economy is back up to par? Maybe how the the RJ might be the next paper to be shut down? I work construction and I feel the pain too - its just all over.



    Too Little Too Late wrote on October 31, 2009 09:29 PM: This credit union should have been taken down before Cumorah was. I am not sure what George Burns is waiting on when it comes to Ensign. What is really bad is that the credit union announced its insolvency because it was shut down. They are going to have a ridiculous run on deposits come Monday.

    On a side note, where is the Mormon Church and all their money? Why aren't they stepping in to help their members who can't pay their bills to these credit unions. Have you seen the $$$ of money the Church has? Have you seen the shopping mall in Salt Lake that was just built? It really bothers me that members of this church pay so much of their salary to a church but never really get the help they should get. Many times when a family is in need, other families in the church helps them, not the church themselves. And yes, all the Mormons reading this can try and say I am wrong but you know deep down inside I am not. Even you families struggling mightly are still giving your money to the church every payday.. And why? Where is your break? They church certainly doesn't need it but obviously its members do. Just look at the two credit unions that have failed recently.. Both Latter Day Saints credit unions... Think about it.. Ponder it.. know the truth


    Mr. Detour wrote on October 31, 2009 01:44 PM: To Free Nevada: The financial condition of the credit union is posted quarterly for the public to see, including the LVRJ, on the NCUA website. Additionally, the Ensign Credit Union is required to post their financial statements monthly at their headquarters.

    In essense, anyone could have determined the credit union has been in serious trouble for the last year. Now they appear to be dead in the water - Really a Zombie credit union for the last 3 months.

    I see from the financial statements the members have lost confidence in Ensign. Share withdrawals in the last 3 months alone have been $10 million.

    The board of directors and CU management are the ones responsible for the death bed watch Ensign finds themselves in currently.


    Free Nevada wrote on October 31, 2009 11:32 AM: If that financial institution collapses because of people reading this and going down and pulling their cash out, wouldn't RJ be on the hook under a dozen different statutes dating back to the 1930s?

    Why do you suppose that when the FDIC takes down a bank, they do it all at once without any advance warning to the bank or the public, at the same time they announce a resolution for everyone to be able to access their funds?


    Upset wrote on October 31, 2009 11:14 AM: This is a very upsetting development.

    It seems many of the credit unions in town acted like drunken sailors investing way too much in the Vegas real estate market. Now the chickens are coming home to roost.

    Soon Vegas will see the demise of Ensign credit union. Who is to blame?


    Astro Boy wrote on October 31, 2009 11:09 AM: Thank you for the head-up. I will be closing my account today.

    I think the Feds will take action soon maybe as eary as next week. Management relied too much on real estate loans in a sinking market. How could they ignore the warning signs?


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