PLEASANTON, Calif.–It appears that another California credit union is feeling the bite of the real estate downturn.
Sterlent Credit Union here is losing money, losing members, and may be facing either a merger with a healthy CU or being placed into conservatorship. Figures for yearend 2007 are not yet available, but at the end of the third quarter, Sterlent's net worth ratio was 6.08%. Although that earned an “adequately capitalized” rating, it is barely above the mark at which Prompt Corrective Action is set in motion.
In just 12 months Sterlent's net worth ratio went into a free fall, suffering a 28% drop in net worth of 6.08% from 8.49% the year before. Sterlent's assets are $107.7 million. Sterlent's total loan delinquency as of September 2007 was $3 million with $2.9 million from indirect lending in the Other Real Estate Fixed Rate/Hybrid Balloon category with $1M in foreclosures at the end of September. The CU put aside $2.7 million as Allowance for Loan losses in Sept. 2007.
President/CEO Sue Raines commented via email that: “Sterlent Credit Union has experienced higher than usual delinquencies in our home loan program during the later part of 2007. While we had adjusted our loan program in late 2006, anticipating adverse market conditions, we began to experience increased loan delinquencies in the second quarter of 2007, from loans made in prior years, which we attribute to the downturn in the real estate market.”
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