Silver State Schools Details Its Tough Year and CEO Vows to 'Rebuild'
The privately insured Silver State Schools Credit Union of Las Vegas, on an urgent campaign to restore its balance sheet following a $22 million capital infusion and a $51 million net loss in 2009, sought last week to reassure its members.
Although the $819 million credit union, the state's largest, is suffering a bad year as a result of large loan losses from the hard hit Nevada economy, an assistance package from American Share Insurance should help cushion against future problems if economic conditions sour,
Its year-end financial report posted on the ASI Web site, americanshare.com, shows ROA of negative 5.6%, net worth at 2.8%, or $23 million, and loans at $740 million. Loan charge-offs were $45 million, or 5.1% of outstandings. Delinquencies at year-end reportedly stood at $60.6 million, or 8.19% of outstanding loans.
President/CEO Dave Rhamy told the Las Vegas Sun the credit union had written off $35 million to $36 million in bad loans during 2009 and that its reserves now stand at $72 million, which gives the credit union security if the Nevada economy further weakens.
In February, Silver State notified members of its planned to accept the $22 million capital infusion from ASI, with Rhamy telling members that the financial aid should bolster general reserves "and positions us to continue to help our members as we move forward."
Last December, Rhamy projected the credit union could have net income of $6 million to $8 million in 2010, saying he has revised the outlook by forecasting a net loss of $10 million. At the worst, the credit union projects it will have to write off $20 million to $22 million in loans during 2010, Rhamy was reported to have said.
Neither ASI nor Silver State has detailed the terms of the $22 million infusion, but Rhamy said the borrowing is long-term debt "and doesn't have a repayment date." But, he said, it will take another two to three years to earn back the losses and be in a position to pay off ASI.
"People should see that we are in a rebuilding mode," Rhamy said. "We went after the money to bolster public confidence."
Last year was a very difficult year for Silver State "and we hope we never see it again," Rhamy concluded. "We just wanted to reassure people we are here to stay. We have been around 60 years and want to be around another 60. We are planning on it."