SAN FRANCISCO – Patelco CU, which agreed last week to acquire the remains of failed Cal State 9 CU, said yesterday it reached a preliminary deal to assist Sterlent CU, another California credit union left on the brink from mortgage lending.
"As a much larger and more highly capitalized credit union, Patelco has the depth to provide Sterlent with additional experienced support and resources sorely needed in these turbulent times," Andy Hunter, president of the $4 billion Patelco said in a statement last night. "Patelco’s role now is to assist Sterlent’s management team in their continued efforts to provide stable member services and stem future losses wherever possible and that is what we intend to do."
The two credit unions said they will disclose the details of the initiative after it is reviewed and approved by regulators.
Sterlent, beset by high delinquencies in its home equity loan portfolio, has accruing losses of $4.8 million for 2007, then of $5.5 million for the first quarter of 2008, erasing all of its equity. At the end of the first quarter Sterlent had negative equity of $292,000.
The deal with Sterlent comes a week after Patelco agreed to acquire the remnants of Cal State 9 CU, another Bay Area credit union that failed because of its home equity lending. Under that deal, Patelco acquired Cal State 9's headquarters, five branches and member accounts, while NCUA assumed its failed assets, including a $250 million HELOC portfolio, which it sold.
Cal State 9 reported some of the largest losses ever for a credit union, $61.6 million for 2007, followed by $53.1 million for the first quarter of 2008.
