In Silver State Wake, Two Las Vegas CUs Consider Mergers
The ongoing troubles at $725 million Silver State Schools Credit Union has also put remaining Las Vegas CUs in the spotlight, with at least two struggling CUs, the $14.5 million Stage Employees FCU and the $59 million SONEPCO FCU, prospecting for potential merger partners.
Margaret Lindsey, manager/CEO of Stage Employees, said the NCUA has urged her 1,200-member CU to come up with a minimum three candidates. She said “that is something we’re working on” but no deals have been struck yet with out-of-state CUs.
The $59 million SONEPCO said its board is following NCUA recommendations to seek out possible merger suitors, also from out of state. The job of looking for merger prospects has been under way since last year, said Sue Longson, president/CEO of 5,000-member SONEPCO and a director of the California and Nevada Credit Union Leagues.
Lindsey of Stage said it has been her board’s hope that NCUA “will let us weather it out” as the CU has drastically cut expenses. Her CU lost $473,000 in 2010 and is at 4% net worth.
In the same vein, Longson said SONEPCO, which she said lost $204,000 in the first quarter and is set to restate its 2010 debt allowance stats to show a year-end loss, has endured a “very difficult struggle” in trying like other CUs to dig out of a deep financial hole.
The red ink is traced to the high delinquency ratios and the housing collapse that came with the recession’s strong grip on Las Vegas.
The good news, Longson said, is that “we at last are looking to show some profits and the delinquency rates have declined along with requests for loan modifications.”
“But we are putting in 25 hour days to get there,” said Longson, adding with a sigh, “We’re tired.”
Echoing Longson, Rick Schmidt, president/CEO of the $138 million WestStar FCU, which two years ago was a prime candidate for NCUA conservatorship, has undergone a turnaround “as we’ve developed some very stringent collection rules and made many “old-fashioned changes including more loan modifications to work with our members to keep them in their homes.”
The result has been a dramatic drop in the delinquency rate from 6% to 1.5%. The 24,000-member WestStar lost $1.4 million in 2010 and already earned $250,000 in the first quarter.
“In no shape or form are we declaring victory because this could all slide back with unforeseen events or conditions but for now things are looking much better,” said Schmidt, who took over WestStar in April 2010, moving from Xceed Financial CU in El Segundo, Calif., where he was chief operating officer.