The ailing $791 million Silver State Schools Family CU of Las Vegas is making slow but steady progress toward recovery even as it seeks to negotiate a five-year extension of a $22 million capital infusion loan made last February by its private insurer.
That was the pronouncement last week from the insurer, aAmerican Share Insurance Inc., which earlier this year had worked out the financial bailout plan for Nevada's largest CU with state regulators.
Dennis Adams, president/CEO of ASI, said the insurer had long planned on the extended terms when it made the loan as part of a plan to bolster the weakened capital base of Silver State. The original February loan matured Aug. 11 with a temporary extension for longer term payments granted through Sept. 30.
"We've been really pleased at what has been accomplished by the management team which has worked extra hard and so it looks to us like they have a small profit in November or December," forecast Adams. "That's pretty good news in a state still suffering so much from the recession."
The ASI head also for the first time confirmed ASI's prominent role in helping Silver State toward recovery, including placing its own consultant in the management team. The consultant has been acting as a "chief restructuring officer" in the hierarchy, said Adams, declining to identify the individual in accordance with what he said were ASI policies.
The restructuring officer assists President/CEO David Rhamy as well as other senior executives involved in operations, auditing and other functions, said Adams.
Silver State, which had been operating under a state regulatory consent order, had retained $26 million as a set aside in allowances for potential loan losses but had recorded $60.8 million in loans past due two months or more, noted Adams.
Its net worth, which includes the $22 million loan, was 4.9% on June 30, "the lowest of 11 southern Nevada credit unions" as noted in an article by The Las Vegas Review Journal. Silver State's net loss for the first half was $13.4 million compared to a $51 million loss for all of 2009.
The initial ASI loan had a 3.25% rate and was subordinated to the claims of credit union members and creditors. Adams said the rate probably will be lowered to be comparable to a two-year Treasury, which is 0.5%.
While Silver State has sought vigorously to dampen negative publicity about its condition, its earlier management turmoil was given high profile media treatment when Rhamy resigned Dec. 18, 2009, and then suddenly returned Christmas Eve as CEO. Earlier this year, both the chief operating officer and chief financial officer left the organization in sudden unexplained departures.
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