In a surprise move, the chief executive officer of the state’s largest credit union has returned to the job less than a week after his resignation was disclosed.
Dave Rhamy, who ended 10 years as CEO of Silver State Schools Credit Union last week, has returned to the post, the Financial Institutions Division reported Wednesday.
The credit union on Friday confirmed the CEO’s resignation. It later explained that Rhamy resigned to focus on his law firm, Rhamy & Coe, which provides estate planning and tax advice.
“The Silver State Schools Credit Union board, (American Share Insurance, which insures deposits) and the (Financial Institutions Division) are coordinating to assist credit union managers and the fund to ensure the ongoing viability of the credit union to serve its members in a safe and sound manner,” division Commissioner George Burns said Wednesday.
Calls to Rhamy for comment were not returned Wednesday. Mitch Fox, Silver State board chairman and separately host of KLVX-TV, Channel 10’s “Nevada Week in Review,” declined comment.
The news came in the midst of questions over Silver State, which relies on a private insurer, rather than the federal government, for deposit insurance.
Deborah Matz, chairwoman of the National Credit Union Administration, which oversees federal deposit insurance for credit unions, made critical comments about the financial strength of American Share, according to a recording obtained Wednesday by the Review-Journal.
“If ASI, if one of their large credit unions fails, and they don’t have the capital to pay out, those (credit union) members will not have their funds protected,” Matz said in response to a question at the Credit Union Executive Society meeting in Palm Desert, Calif., on Dec. 9. “They will lose all their funds.”
But her comments drew a sharp response.
“Deborah Matz has never walked in the door of this institution,” American Share Chief Executive Officer Dennis Adams said by phone Wednesday. “How would she know?”
Silver State, which has $883 million in assets and 80,000 members, is the second-largest credit union insured by American Share, but Matz didn’t mention any credit union by name.
American Share also insures deposits at Clark County Credit Union, Boulder Dam Credit Union and Plus Credit Union, along with credit unions in eight other states. The mutual insurance company provided financial assistance for the purchase of Cumorah Credit Union earlier this year by Credit Union 1 of Rantoul, Ill.
Adams said the private insurance company was financially stronger than the NCUA’s deposit insurance fund. Adams counted $170 million in capital at American Share and said it would be more than adequate to cover losses at a typical credit union the size of Silver State, which are about 4 percent of total assets.
Silver State lost $36 million in the first nine months.
American Share doesn’t believe that Silver State will need a financially assisted merger in the near term, Adams said, but he said some American Share credit unions on the West Coast have shown potential interest.
Matz commented about American Share in response to a question during a meeting for directors and officers of credit unions. The attendee asked whether large credit unions would exit the federal insurance program and switch to private insurance at American Share, leaving smaller credit unions to bear expenses of failed credit unions.
In several states, including Nevada, credit unions have the option of relying on American Share for deposit insurance, rather than federal insurance.
“Any credit union can do that at any time,” Matz said. “I would advise them to check ASI’s Web site carefully and look carefully at their financials before making a decision. It would be a serious disservice to their members.”
Matz said she didn’t think large credit unions would switch to private insurance.
CEO Adams said American Share couldn’t accept large credit unions because it isn’t big enough to absorb a giant institution and is restricted by state law.
The American Share CEO said federally insured credit unions are unhappy about the extra premiums they are paying because of failures at corporate credit unions. Insurance premiums paid by federal credit unions have increased by five times as a result of losses at failed federal credit unions, Adams said.
The private insurance chief said he had spoken with 40 credit unions interested in American Share coverage over the last year. Of those, 11 have applied for American Share insurance. Adams counted three credit unions that converted to private insurance and said they have $350 million in combined assets, he said.
“It isn’t like a rush to the door,” Adams said.
American Share may need to increase the premium on deposit insurance because of losses during the recession this year, he said.
Nevada Federal Credit Union is the largest federally insured credit union in the Silver State.
“Nevada Federal Credit Union believes there is no substitute for the full faith and credit of the U.S. Treasury and we will always be federally insured,” said Brad Beal, chief executive of Nevada Federal.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.