LAS VEGAS–CEOs at credit unions with narrower fields of membership tied to industries being hard hit by the coronavirus pandemic were profiled in the Wall Street Journal.
Among those featured: Rick Schmidt, CEO of WestStar Credit Union in Las Vegas, which serves the currently shuttered gaming industry in the city, noted that one-in-five of the CU’s members have asked for a deferral on a car or home loan. It’s a number Schmidt told the Journal WestStar expects will only go up.
“We see the good parts of having that tight community all the time—we know our members, we know their employers, we know what they need,” Schmidt told the Journal. “The bad part is we’re seeing now.”
The Journal cited CUNA data showing one-third of the nation’s 5,200-plus credit unions are tied to a single employer, industry or other association, and provided an explanation around CU “common bonds and their evolution.
But many credit unions, the Journal said, “resemble” Duncan, Okla.-based Endurance Federal Credit Union, which was founded 1960 to serve Halliburton Co. and other oil-field workers. Halliburton has since laid off or furloughed more than 4,500 employees in the U.S. since the beginning of March, including almost 600 in Duncan.
“This many people, in a town this size, hurting all at the same time,” CEO Chris Bower told the Journal. “Find me a big bank where that’s true.”
‘Band-Aid on Huge Wound’
The Journal noted the $155-million EFCU has $95 million in car loans, and has provided numerous 90-day deferrals to many members and stopped repossessions.
“You’re just putting a Band-Aid on a huge wound. But what’s the alternative?” Bowers was quoted as saying. “I don’t want to own a parking lot full of cars.”
The report noted Endurance has been trying to diversify its membership for years, opening up to employees of local schools and hospitals.
In Las Vegas, Schmidt told the Journal WestStar’s 22,000 members work at about 200 companies that feed Nevada’s gaming and hospitality scene. Many have been out of work since Gov. Steve Sisolak ordered casinos to close starting March 18.
Schmidt told the publication he is fielding fewer deferral requests now that federal stimulus checks and state unemployment benefits have started to come in. Still, borrowers representing one-fifth of WestStar’s $116 million loan book skipped their April or May payments, the Journal reported.
FICO Now ‘Useless’
“WestStar is trying to guess how many loans might go bad before this is over. Mr. Schmidt said that bankers’ usual metric, a borrower’s FICO credit score, is almost useless now that so many borrowers are out of work,” the Journal reported. “Instead, his team has been ranking various casino jobs by how soon they are likely to come back once the shutdown order lifts. Those in a union are deemed safer credits. Those that rely on tips for more of their income are deemed riskier.”
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