Silver State Erases First Quarter Gain, Shows $2.8 Million Loss
Making it one of the last credit unions in the nation to report quarterly results, the long-troubled Silver State Schools Credit Union of Las Vegas posted a $2.8 million net loss for the first half, erasing a small profit in the first quarter.
Still, the new president/CEO, Andrew Hunter, who took over the $712 million and privately insured Nevada CU little more than a month ago, downplayed any gloom. He said management “continues working to stabilize” the CU in “the most challenging Nevada economy in more than 50 years.”
Moreover, said Hunter, a retired Patelco CU CEO recruited by American Share Insurance, the Dublin, Ohio private insurer, the second quarter net loss of $2.9 million and year to date stats “compare favorably with a net loss of $13.4 million for the same period of 2010.”
Hunter said the primary factor in the second quarter net loss was an increase in loan loss reserves, increasing the allowance from $22.5 million at quarter end to $28 million.
“The increase in reserves for loan losses doesn’t reflect deterioration in the loan portfolio,” said Hunter. “Since quarter end, delinquency has increased only slightly, from $44 million to $45 million. The increase in loan loss reserves rather is primarily the result of a more sophisticated, thorough and ultimately more conservative process of evaluating our loan portfolio.”
While analysts express worry over Silver State’s 4% net worth and shrinking assets – down $300 million in five quarters – Hunter contends there are mitigating factors relating to loan loss reserves and the phenomenon of CUs everywhere witnessing declining balances of high interest bearing CDs. So, he said, the assets are falling but “not in a bad way.”
He said also Silver State has $4.8 million in assets in process of liquidation, which reflects the fair market value of repossessed autos and real estate.
“All losses on those have already been recognized and will not affect future profits,” he said.
Separately, Hunter said the CU has hired Steve VanSickler as its new chief lending officer. VanSickler, in the financial industry for 25 years, most recently was vice president of lending and collections at the $350 million Visterra CU in Moreno Valley, Calif.
“In this economy, in this market, we weren’t expecting a smooth ride.” said Hunter. “However, it’s worth noting that our earnings for the quarter before the provision for loan losses were a solid $4.2 million. And we expect to show considerable improvement in overall results by the end of 2011 as compared with 2010.”