SACRAMENTO, Calif. – The Department of Financial Institutions announced yesterday it has issued a cease and desist order against financially ailing Sterlent CU for unsafe practices with respect to its troubled mortgage portfolio.
The DFI issued a similar order against Cal State 9 CU last September, two months before taking over the one-time $440 million credit union that would report a record $61.6 million in losses for the year.
Pleasanton-based Sterlent CU reported that rising delinquencies in its mortgage portfolio, mainly home equity lines of credit, pushed it into the red to the amount of $4.8 million for 2007. The rising delinquencies, $4.6 million in the real estate portfolio at year-end, forced the credit union to move an additional $3.6 million into its provision for loan losses.
Sterlent is among several credit unions in the area to be struck by the mortgage crisis, including Cal State 9 CU. Several other area credit unions reported large losses for the year, including Meriwest CU (-$9.2 million); Valley FCU (-$6.7 million); SAFE CU (-$5 million); Kaiperm FCU (-$3.8 million) and Travis CU (-$3 million).
During 2007, Sterlent saw its savings decline by 4% to $95.6 million, and its assets decline by more than 16% to $101 million. Net worth fell to just over 5%, putting the credit union on the watch list for prompt corrective action.
Credit union officials did not return phone calls.
