Citing Closed Branches, Loan Losses, Silver State Posts $3.5 Million 1st Quarter Loss
Silver State Schools Credit Union is still posting large losses – $3.5 million for the first quarter – and it blames a higher provision for loan losses and the cost of closing branches.
Still management at the beleaguered $650 million Las Vegas credit union said that despite the earnings and loan losses “we continued to make progress during the quarter” with a reduction in mortgage delinquency.
“Although our first-quarter operating expenses were adversely impacted in the short term by the closing of three branches in January, these actions will lead to reduced operating expenses in the future,” forecast Andrew Hunter, the retired Patelco CU CEO hired in 2011 to help restore the balance sheet.
Accelerated foreclosure actions, said Hunter, have resulted in realized losses exceeding specific loss reserves on some loans, “contributing to the higher than anticipated loan losses and net operating losses for the quarter.”
During the first quarter, the privately insured Silver State Schools, said Hunter, wrote down its most severely delinquent mortgage loans to fair value. The combination of these events resulted in a significant $15 million reduction in SSSCU’s total loan delinquency from approximately $52 million at December 31, 2011 to $37 million at March 31, 2012,” said Hunter.
And so, he said, Silver State Schools has witnessed a sharp reduction in “early stage mortgage delinquency during the past three months which we believe bodes well for our future results.” Silver State Schools’ $3.5 million first quarter net loss compares with $90,000 quarter for the same quarter of 2011 and a fourth quarter 2011 net loss of $2.8 million.
In a press release, Silver State Schools made only brief mention of the $24 million long term capital note taken out two years ago from American Share Insurance Inc. of Ohio to stabilize the credit union and prevent it from failing.
“Liquidity continues to be strong,” said Hunter with “regulatory net worth standing at $24 million.” He added, “We remain confident in our future prospects.”
Silver State Schools has seen a sharp reduction in what Hunter called early-stage delinquencies during the past three months, “which we believe bodes well for our future prospects.”