RENO, Nev. – In a scenario playing itself out across the so-called Sand States, poorly performing real estate loans combined with losses accrued from the corporate credit union system helped push Clearstar Financial CU over the brink last week.
The one-time $175 million credit union–just $141 million by the time NCUA liquidated it on Friday–was plagued by high delinquencies and charge-offs on its loan portfolio. But losses related to the corporate credit union bailout pushed its net worth down even more to just 4.1% at mid-year, according to 5300 Call Report data filed with NCUA.
Those losses amounted to $820,000, the data shows. That includes $217,861 worth of membership capital shares and $196,300 in paid–in-capital in WesCorp FCU, which was charged-off; and $405,537 for Clearstar’s share of NCUA’s corporate credit union bailout.
The credit union, chartered in 1949 to serve members of the Reno Classroom Teachers’ Association, was seized by NCUA and its remnants assigned by NCUA to United FCU of St. Joseph, Mich., in a so-called purchase and assumption agreement. The deal effectively gives the $950 million credit union a foothold in the Nevada market.
The demise of Clearstar, the 19th credit union failure this year, is the second in recent weeks of one of the Nevada’s biggest credit unions, following last month’s purchase and assumption of Community One FCU by Utah’s America First CU. Clearstar and Community One were the state’s ninth and eighth largest credit unions.
The corporate losses also weighed heavily on Community One FCU, the one-time $180 million credit union. Data submitted to NCUA shows the Las Vegas credit union lost almost $2 million on the corporates, including $563,600 of paid-in-capital and $220,020 of membership capital shares it had with WesCorp, and a $1.2 million charge as its share of the corporate credit union bailout.
A similar situation occurred with Kaiser Lakeside CU, the Oakland, Calif., liquidated last month and assigned to SafeAmerica CU. Kaiser, the one-time $40 million credit union, lost more than $1.5 million of its investments in corporates, according to NCUA data. Tiny Comunidades FCU, the one-time $1.6 million Los Angeles credit union liquidated earlier this month which ended up with just $700,000 in assets, lost $25,320 on its corporate investment.
