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State credit union gets aid
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LAS VEGAS REVIEW-JOURNAL
The state's biggest credit union has received a $22 million financial bailout from the mutual insurance company that insures its deposits.
Dave Rhamy, chief executive officer of Silver State Schools Credit Union, disclosed the transaction with Ohio-based American Share Insurance in a statement posted Thursday on Silver State's Web site.
American Share provides deposit insurance to Silver State Schools and three other major Southern Nevada credit unions -- Clark County Credit Union, Boulder Dam Credit Union and Plus Credit Union.
Other credit unions in Southern Nevada are backed by a federal agency, the National Credit Union Administration.
Like other credit unions, Silver State has been struggling as more and more loans go bad during the worst Nevada recession in decades. Because of its size and the lack of federal government backing, some analysts were particularly concerned about Silver State, however.
"I am pleased to announce that we have successfully completed this transaction," Rhamy stated. "This capital infusion bolsters our general reserves now and positions us to continue to help our members as we move forward."
Rhamy didn't disclose the amount of the so-called "special assistance" or terms of the financial aid. That information came from a knowledgeable source.
News that American Share was negotiating to provide financial assistance to Silver State Schools came out in late December.
The credit union is the only one in Nevada that has yet to disclose its fourth-quarter financial results.
Silver State's Web site late Thursday reported that an Ohio mutual insurance company that insures deposits is providing "special assistance" that will make the $900 million financial institution adequately capitalized to meet regulatory standards.
Local banking professionals said that such a bailout transaction is extremely unusual, and, possibly unique.
Silver State, which has 80,000 members including many school teachers and educators, has struggled over the last year more as more loans went bad.
The cash infusion is considered positive news, according to analysts.
Rhamy noted that the credit union has gone through the toughest financial period since it was founded by several teachers in 1950.
"During those 60 years, we've seen periodic downturns in the national economy, but certainly nothing that compares to the past two years," he told members.
"During 2009, as real estate property values continued to decline and record numbers of members experienced reduced income, your credit union recorded $8.1 million (in) net income from operations, but set aside $59 million to cover current and potential loan losses," Rhamy said.
Late last year, Rhamy resigned his position as chief executive officer so that he could focus on his law practice. Within days, however, he agreed to return to Silver State Schools.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
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