PLEASANTON — Red ink mounted at Sterlent Credit Union during the first three months of 2008, and the credit union said it is working with a possible partner to help address its financial woes.

The credit union lost $5.5 million during the January-March period. The losses for those three months alone exceeded the $4.8 million Sterlent lost during all of 2007, according to a quarterly report the company has filed.

The most recent difficulties underscore how the morass in housing and the mortgage industry has engulfed a wider array of financial institutions.

In recent years, Sterlent embarked on a program to sell home equity lines of credit to its members. But the crash in residential real estate caused many of those loans to fail.

"Like many other financial institutions in similar situations regarding delinquent loans secured by real property, we continue to work with these member borrowers and under full guidance of our regulators," Sue Raines, president and chief executive of Sterlent, said in an e-mail response to questions from this newspaper.

Pleasanton-based Sterlent reported that it had $3.1 million in delinquent loans at the end of March. About $2.9 million of those delinquent notes were adjustable rate real estate loans, according to the quarterly filing.

Those numbers represented an improvement from the end of 2007, when Sterlent reported it had $4.8 million in delinquent loans of all types on its

Although Sterlent executives would not provide details, the company indicated it is looking to an outside organization that could help stabilize its balance sheet.

"We are in the process of working with a potential partner that will provide positive long-term solutions to these issues," Raines said. Sterlent has branches in Pleasanton, Castro Valley and Sacramento.

Sterlent's problems represent the second time that significant losses have struck an East Bay credit union in 2007.

Concord-based Cal State 9 suffered steadily increasing levels of red ink and was forced into a state conservatorship in November. Cal State 9 also said a program of home-equity loans burdened it with losses.

Still, these problems are more likely isolated incidents rather than a warning that credit unions generally are in financial disarray, according to officials with the California Credit Union League.

"We feel the credit union industry remains very healthy in California," said Chris Collver, a regulatory and legislative analyst with the league. "But obviously, the housing market is impacting the industry."

Case in point: Credit unions in 2007 reported that 0.85 percent of their total loans were delinquent. That was up from a delinquency rate in 2006 of 0.47 percent, according to the league. Typically, regulators believe that a delinquency rate below 1.5 percent is relatively healthy.

California credit unions have offered home equity lines of credit and subprime loans of the type that have contributed to the mortgage mess. But Terrin Griffiths, an economist and analyst with the league said she believes California credit unions have for the most part used conservative standards for issuing realty mortgages.

"Credit unions in general have always underwritten these loans very prudently," Griffiths said. "They don't engage in the lending practices that we have seen outside of the regulated part of the industry."

Despite the problems at Sterlent, the company's top priority is its members, according to the credit union.

"We continue to focus on meeting the needs of our members each and every day, without fail," Raines said.

George Avalos covers jobs, economic development, commercial real estate, finance and oil companies. Reach him at 925-977-8477 or gavalos@bayareanewsgroup.com