Credit union could receive cash infusion

The top state credit union regulator on Tuesday declined to confirm reports that a private insurer was discussing a cash infusion for struggling Silver State Schools Credit Union of Las Vegas.

"I have no comments about arrangements that have not been finalized," said George Burns, commissioner of the Financial Institutions Division.

American Share Insurance, which insures deposits at Silver State, and Silver State officials have been quoted in other publications saying that they and Burns are negotiating the undisclosed amount of bailout money.

Calls to Dennis Adams, chief executive of American Share Insurance, and Dave Rhamy, chief executive of Silver State, weren't returned Tuesday.

Silver State lost $36 million in the first nine months of this year, and Bankrate.com, a research firm for financial institutions, rates Silver State Schools Credit Union the lowest of five ratings for safety and soundness as of June 30.

Bankrate.com cited "well below standard" net worth or capital, "very questionable asset quality, substantially lower than normal profitability, and lower than normal liquidity." Liquidity refers the amount cash and assets that can be easily converted into cash without affecting asset prices.

In a separate development, American Share Insurance reported it is charging a special premium for the first time in its 35-year history. The insurer on Tuesday said it will charge 0.15 percent of deposits in addition to standard charges for deposit insurance because it needs to boost its reserves because of losses.

Adams cited "record low interest rates" and "significant guaranty loss provision expense this year" as reasons for the special assessment.

Silver State, which has about $800 million in deposits, will pay $1.2 million for the special premium.

Some of the loss provision expense stems from financial assistance that American Share provided for the October merger of Southern Nevada's Cumorah Credit Union with Credit Union 1 of Rantoul, Ill. American Share agreed to absorb some potential losses from problem loans at Cumorah.

The special premium didn't upset Wayne Tew, chief executive officer at Clark County Credit Union.

"I'm grateful this is the first time I had to pay (a special premium to American Share)," Tew said.

The National Credit Union Administration, which provides insurance to federal credit unions, and the Federal Deposit Insurance Corp., which insures deposits at banks, earlier charged financial institutions with premiums, Tew said. The NCUA has levied larger special premiums than American Share, he said.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.