The head of American Share Insurance, the Ohio-based private carrier, voiced confidence on Tuesday that Nevada's largest and long-troubled credit union, the $791 million Silver State Schools, can start showing a profit soon even though the Las Vegas CU missed the 2010 target.
"That Nevada market still is pretty rough with very high unemployment and despite it we feel pretty good about what's happening," said Dennis Adams, the president/CEO of Silver State's insurer based in Dublin, a Columbus suburb.
In recent weeks, Silver State has come under new scrutiny from the Las Vegas media for its ongoing financial travail marked by a regulatory state consent order in 2009 and a long-term $22 million capital infusion from ASI last February.
Adams, stressing that ASI oversees Silver State's operations closely "without actually running it," said that while the fourth quarter could show an additional $500,000-$1 million loss, that is still an improvement from Silver State's large losses in 2009. Through the first three quarters it lost $17 million with 4.7% net worth.
Reporting on its financial condition and in blogs, the Las Vegas Review Journal noted that assets have dropped markedly and that gross income of $43,000 in the first nine months was a decline from the $51.7 million of a year ago. Delinquencies were at 8.31% after $7 million in loan chargeoffs in the third quarter compared to 7.31% a year ago.
"You have to remember this is like a huge barge and that it takes quite a bit of time to turn it around," Adams said.
Silver State management has been steadfastly mum in discussing its financial problems, consistently turning away reporters' phone calls and e-mails but meanwhile closing as many as six branches and laying off employees.
"There could be a couple more branch closings this year but that is in line with their plan," Adams said.
One bit of the Las Vegas media coverage centers on private insurance and a comparison of the Rhode Island CU/bank debacle in 1991 in which a private insurer for 46 CUs and banking firms failed, freezing $1.7 billion and 250,000 consumer accounts and triggering CU failures.
"There would be a huge reputational risk for all credit unions if Silver State Schools takes a turn for the worst," wrote blogger Charles Bruen, CEO of First Entertainment CU.
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