SUNNYVALE, Calif. – Don’t tell the executives at Star One CU they’re in the midst of the worst financial crisis to hit the U.S. in decades–the $52.3 million net, more than four times last year’s $11.8 million net, belies that.
"We weren’t chasing the funny stuff," said Rick Heldenbrant, president of the $4.1 billion credit union, of the subprime and other alternative mortgage products that got other lenders into trouble. But now this former Lockeed-turned-community credit union is thriving by picking up the pieces from other lenders’ mistakes, growing mortgage loans by 50% in 2008, to $1.4 billion.
With a very low delinquency ratio, just 0.10%, and charge-off ratio, just 0.11%, these new loans are paying off in a big way at a time when investments are paying low rates. Especially because the credit union stopped selling mortgages four years ago and now holds them all in portfolio, said Heldenbrant.
This has paid off in a big way with a 1.38% return-on-assets for 2008, up from a paltry 0.38% for 2007.
