Silver State Schools Credit Union reported a $3.5 million loss in the first quarter as the credit union continues to struggle with its portfolio of delinquent mortgage loans.
During the first quarter, Silver State Schools charged off $15 million in loans and increased provisions for loan losses by $6.8 million.
At the end of the first quarter, the credit union reported that $37.1 million in loans were 60 days or more past due.
Read the story in the Las Vegas Review-Journal.
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That should add up to about a hundred million in losses over the last three years.
ReplyDeleteHow much have the taxpayers paid to take over failed Nevada banks? For Nevada Commerce it was $31 million.
ReplyDeleteThe most salient point of this story is that Silver State Schools' net worth is less than the loan from ASI, the private insurer. Technically, Silver State is insolvent. I wonder if ASI can take that much of a hit.
ReplyDeleteTaxpayers are not paying directly for any financial institution to be taken over by the FDIC or the NCUA. The respective deposit insurance funds are supported by the institutions insured by the funds. The institutions pay via increased premiums and assessments to shore up the funds. Ultimately the consumers pay due to the higher cost of operations for the FIs.
ReplyDeleteThank you. It is confounding how many even senior practitioners do not understand this important fact. It is the deposit insurance funds, not the FIs, that are backed by the "full faith and credit if the US taxpayer". My guess is the US Treasury would become the conservator of a failing DIF or NCUSIF, possibly fold the failing one into the other. Don't know if "full faith" is defined specifically, or if it was delibertely limited by Congress to just and expression of 'good faith' to prevent manipulation, moral hazard.
Deleteanyone who thinks the taxpayers arent both indirectly and directly paying for ccu and cu problems is not paying attention or biased. take a look at the cost of shares at troubled cus...and all cus. their members are paying in lower deposit yield and lower than what banks are paying. some of these credit unions are abusing their members and taking advantage of inertia. look at arrowhead cost of funds as an example.
ReplyDeletethe treasury loan and the use of the federal reserve balance sheet by ccus are indirect taxpayer bailouts.
Do you honestly believe that a low cost of shares at a credit union is a tax payer bailout? If so, please answer me this. If a merchant raises the price of their goods/services, is that also a taxpayer bailout? If not, then please explain the difference.
DeleteYou probably qualify as biased versus uninformed. A merchant raises or lowers prices to increase sales, protect margin if costs go up, etc. the customer buys or doesn't based on value perceived versus other offerings.
DeleteArrowhead and it's ilk are taking advantage of inertia to CLUB "members"'
Members are paying for CCU assessments and poor underwriting at retail credit unions all over the country. This is also occurring at banks, but based on deposit costs, not as bad.
Re.taxpayers. Who funds the State agencies? What was the State Banking Examiners doing while this credit union was going down the toilet? The economy may have had something to do about the loan losses, but it is likely most of the loan losses resulted from loans that never should have been made.
ReplyDeleteDo you have any idea how bad the Vegas RE marked tanked? It took out a number of smaller credit unions. Look at the number of Nevada CUs in 2008 and that list today! It is MUCH smaller.
DeleteHave no doubt economy has had adverse effect on this credit union as well as other financial institutions, but i would not be surprised to find out bigger problem lies with poor underwriting. Would be interesting to see reports prepared by state bank examiners since the losses began.
DeleteTroubled Silver State Schools CU lost another $3.5 million for the first quarter, erasing all of its remaining net worth and leaving it only with the emergency assistance provided by its private deposit insurer ASI.
ReplyDeleteThe one-time $1 billion credit union said the first quarter losses left it with $24 million of net worth—all of it due to a $26.4 million loan from ASI. Over the past two years Silver State has been counting ASI's loan as net worth. Does ASI have enough reserves to cover this huge liability. Praise The Lord it is not insured through the NCUA NCUSIF! Put a fork in it - it's done.
Many NV credit union's remain open, and lights remain on. Silver State Schools CU has suffered from mismanagement and incompetence. As Cinco de Mayo approaches this Pinata deserves to be smashed.