Conditions seem to be improving for Nevada's largest and most troubled credit union, the $819 million Silver State Schools Credit Union, according to its private insurer, American Share Insurance of Ohio.
Sounding a positive note after months of depressing news, Dennis Adams, the president/CEO of ASI, maintained there are a number of signs that Silver State Schools is on the mend. The Las Vegas credit union lost $51 million last year, posted 2.8% capital and witnessed months of high- level management turmoil.
"You can never be certain with these kind of financial challenges, but it looks that Silver will become profitable in the second half," forecast Adams, whose Dublin, Ohio-based firm has been on the firing line since last year following ASI's February decision to lend $22 million in long- term notes to Silver State to prevent a collapse.
Adams said the ASI examiner/audit group is in "constant communication" with state regulators, Silver State CEO David Rhamy and its new management team to ensure a turnaround "since we are very much obligated to protect our members' funds" used to shore up the CU.
ASI, Adams insisted, has had no part in dictating to Rhamy on branch closings or the departures disclosed late last month of veteran managers, Carol J. Gibson, executive vice president and chief operating officer, and Bernard A. King, executive vice president and chief financial/administrative officer.
Adams said personnel matters are left to senior management. He said ASI deals directly with the CEO and the board, which he praised for becoming more active and engaged in the process of restoring the balance sheet.
"I am very pleased with the cooperation that has been shown all around between Dave Rhamy, a very involved board and the [Nevada] Financial Institutions Division," said Adams.
The division on March 22 entered into a consent order with Silver State, requiring the credit union to abide by certain obligations and to produce certain documents all relating to a November financial exam.
The division has declined to spell out details of the agreement, and the credit union has maintained a firm "no comment" stance on the pact as well as on its condition or the management changes beyond formal website pronouncements.
Those pronouncements have included a periodic "President's Message" to the CU's 80,000 members, detailing the tough Nevada economy and steps Silver State expects to deal with its "multifaceted" plan for financial recovery.
Adams told Credit Union Times he was heartened by recent numbers that showed a narrowing of losses and delinquencies at Silver State. In the first three months, Silver State reported a $8.5 million loss, "but half that is for loan loss allowances," said Adams.
"I think the real good news is that they have an aggressive management and board" going after delinquencies on what he maintained are basically solid credits that went sour in the very serious Nevada recession.
"They are not acting like some kind of zombie credit union, throwing up their hands and waiting to say goodbye," Adams said.
In visits with other distressed CUs in ASI's system, which covers 154 CUs in nine states, Adams said he has found positive attitudes among senior managers who for months have in the normal course of business looked for inefficiencies, cut staff and closed branches.
He recalled one board member questioning cost-saving steps that needed to be taken by his credit union with Adams arguing that CUs have to face reality. "I told him simply, 'Welcome to the economy,'" said Adams.
For its part, Silver State, as previously announced, expects to close five of its 21 branches in Las Vegas and Reno on June 4, saving $1.1 million this year and $1.6 million next year, according to the credit union.