As of June 30, its net worth was 7.06%, down from 8.62% as of June 30,2008, according to its report filed with the NCUA. The report showed that 4.9% of its loans were delinquent, compared with 0.39% as of June 30, 2008.

The credit union's return on average assets was negative 2.64%, compared with negative 0.24% on June 30, 2008.

Clearstar had a net worth ratio of 4% as of June 30, compared with 7.6% on June 30, 2008, according to NCUA reports. The report showed that 2% of its loans were delinquent as of June 30, compared with 1% on June 30, 2008.

The credit union's return on average assets was negative 3.89%, compared with negative 1.89% on June 30, 2008.

Clearstar Financial Credit Union had $144 million in assets and 16,000 members. United Federal Credit Union, headquartered in St. Joseph, Mich., has assets of $941 million.

The NCUA was Clearstar's liquidating agent following the decision by the Nevada Division of Financial Institutions to close the credit union.

Clearstar Financial Credit Union President/CEO Ritch Van Duzer retired from his 20-year CFCU career just six weeks shy of the $144 million credit union's Sept. 25 conservatorship. Former Chief Operations Officer Lynn Lundahl had been named interim CEO.

Clearstar's financial problems began back in the first-quarter 2007, when return on average assets tumbled to negative 0.03% after closing 2006 just shy of 1%. The Reno, Nev.-based credit union couldn't recover in 2007, as delinquencies and charge-offs steadily increased to a combined ratio of nearly 2% by Dec. 31.

The combined delinquency and net charge off ratio rose to 4% by the end of 2008 and has deteriorated further in 2009, to 5.34% as of June 30.

Clearstar's auto loans and home equity lending have been hit hard with losses: $3.5 million in auto loans were charged off as of Dec. 31, 2008, with another $1.8 million written off during the first two quarters of 2009. The credit union is very active in point-of-sale indirect lending, with more than $43 million outstanding on the books as of June 30, 2009. That figure has fallen considerably in the past year, when Clearstar recorded $65 million indirect loans outstanding.

Another red flag for regulators was a 6.07% delinquency rate in home equity lending as of June 30, which jumped from the 0.79% reported in the first quarter. Clearstar had no home equity delinquencies as of June 30, 2008.

Clearstar's decision to offer high-interest checking to members contributed to its financial problems, as the credit union launched the product during the first quarter of 2007, the same quarter ROA fell. According to the consumer blog Bankdeals (bankdeals.blogspot.com), Clearstar was paying 6.10% APY on reward checking in February 2007, one of the highest rates in the country. The offer promptly increased cost of funds to average assets from 1.87% to 2.51%; though, at the time, the inflated figure was only slightly higher than its peers.

In 2009, the NCUA has liquidated nine credit unions and of those seven have had assets purchased and assumed by other credit unions. There have also been nine assisted mergers.

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