The regulatory action came as losses at the 60-year-old credit union mounted to $45.9 million at the end of the third quarter, from $9.1 million at mid-year. As a result, the credit union's net worth plummeted to just 2%, well below federal limits.
Most of the losses were centered around the credit union's real estate loans, mostly a home equity line of credit program, that was developed about a year ago.
Cal State 9 is the fourth mortgage-related credit union failure in recent months, with more troubles expected to be revealed after NCUA reports third quarter financials for all credit unions in the coming days.
The failure follows recent real estate-related failures of $340-million Norlarco CU, and $320-million Huron River Area CU. Another failed credit union, New Horizons Community FCU, also had a large real estate portfolio. All three credit unions were exposed to speculative real estate developments in southwest Florida. (CU Journal)