Silver State Schools Credit Union posted a $3.5 million loss for the first quarter, blaming a higher provision for loan losses and the costs associated with closing three branches for continued red ink.
Still, CEO Andy Hunter is confident the Las Vegas-based credit union is making "very good progress" toward profitability by reducing its mortgage delinquency. So confident, Hunter just made an offer on a house in Las Vegas.
"We lost $3.5 million, which is not a good number," Hunter said Tuesday. "We are not happy with that number ... it looks a little worse than the number we reported in the fourth quarter."
Silver State Schools lost $2.8 million in the fourth quarter, he said. Hunter took over as the credit union's president and CEO on July 11, replacing Dave Rhamy, who retired, as CEO.
Hunter attributed the quarterly loss to accelerated expenses associated with closing three branches in January, but the closures will help reduce operating expenses in the future.
"We think nine (remaining) branches is a large enough footprint to serve our members," he said.
The $650 million credit union also accelerated foreclosure actions, resulting in realized losses exceeding specific loss reserves on some loans.
"We increased our loan loss reserves," Hunter said. "Also we changed their valuation method, meaning we decided these properties may not be worth as much if we ended up in foreclosure or short sale as we thought they would be."
The combination prompted a reduction in the credit union's total loan delinquency, from about $52 million as of Dec. 31 to $37 million in the first quarter.
"We have seen a substantial reduction in the amounts of early stage mortgage delinquency during the past three months, which we believe bodes well for our future," Hunter said.
Silver State Schools has posted about $33.1 million in losses since Jan. 1, 2010.
"This credit union's philosophy is we made loans to members where they live," Hunter said. "So we were very heavy in mortgage lending... That's created a bigger portfolio of difficult loans that we have to work through."
The credit union serves teachers and their families in Nevada. The Clark County School District has said it may be forced to lay off about 1,000 teachers to close a $60 million shortfall.
Hunter noted that the district had hired about 800 new teachers last fall.
"We are assuming that new teachers would be at the greatest risk," Hunter said. "So we went back and looked at the teachers who joined the credit union in the last two years and what they have with us and its fair to say in terms of loans ... it's fairly minimal."
Hunter said he doesn't expect a 1,000-teacher layoff, but said the credit union will "look for ways to help those who are laid off."
Contact reporter Chris Sieroty at email@example.com or 702-477-3893.