SAN JOSE, Calif. - Another state charter in California was placed into conservatorship last week when regulators took over the $257-million Valley CU.
Valley CU, which reported a $5.8-million loss for the first half of 2008 and which at its peak had assets of $310-million, follows conservatorships of Cal State 9 and Sterlent in California this year.
The Sept. 2 action by NCUA and California's Department of Financial Institutions came as a result of "declining financial health," according to Matthew Davidson, interim CEO of Valley CU. "It was mostly loans," Davidson told CU Journal on Sept. 3, the day the conservatorship was announced.
Asked if real estate loans-a problem throughout the Golden State-were the cause, Davidson replied, "Indirectly. This credit union did not do subprime mortgage loans-nor did most credit unions-but when members have those types of mortgages, then they have trouble paying back their seconds or their car loans. All of which is related to the economy."
According to the California DFI, "The credit union's net worth ratio had declined to 4.8% as of July 31, and it had suffered significant losses in 2008."
Davidson was with the California league prior becoming COO at San Diego County CU. He previously worked for Ohio's regulator, where he ran several credit unions under conservatorship.
"I am looking to stabilize the credit union's financial condition and improve it," he said, indicating it was early and he has no specific initiatives planned.
Valley CU management placed a link to a letter to the CU's 26,900 members on its home page. The letter, signed by Davidson and NCUA Regional Director Melinda Love, acknowledged the conservatorship made sure members were aware of deposit insurance provided by the NCUSIF. Members with questions were instructed to contact the CU.
Valley CU originally was chartered in 1953 and today serves Alameda, Contra Costa, and Santa Clara Counties in the San Francisco Bay Area.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
