Saturday, June 26, 2010

Arrowhead CU Placed into Conservatorship

The National Credit Union Administration (NCUA) placed Arrowhead Central Credit Union of San Bernardino, California, into conservatorship.

Arrowhead Central Credit Union was placed into conservatorship due to declining financial condition. The Los Angeles Times (blog) reported that the NCUA had been unable to find a partner for Arrowhead.

The $876 million credit union was significantly undercapitalized as of March 2010.

Approximately $20.1 million in loans were 60 days or more past due and another $18.4 million in loans were between 30 days and 60 days past due. Arrowhead also reported holding $5.4 million in foreclosed or repossessed assets. However, its allowances for loan and lease losses were $49.5 million.

In recent months, Arrowhead Central has sold off its insurance agency and also sold branches for $7 million to Alaska USA FCU in an effort to stabilize its financial condition.

Executives were put on paid administrative leave and the credit union's board of directors and supervisory committee were dismissed.

The Federal Credit Union Act authorizes the NCUA Board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests or protect the National Credit Union Share Insurance Fund.

1 comment:

  1. Curious about ncua's methodology.
    at 1q/2010, arrowhead had 3.36 net worth, 68% delinquencies to net worth, 2.29% delinquency to assets and a 1.20 roa.
    compare that to the following cu's all (except 1 at 700m assets) are > $1 billion in assets.

    cu1- 4.17 net worth, 68% delinquency to net worth, 3.37 delinquency to asset, -.54 roa.
    cu2- 3.84 net worth, 99% delinquency to net worth, 3.8% delinqunecy to assets, .97 roa.
    cu3- 4.23 net worth, 51% delinquency to net worth, 2.17 delinqunecy to asset, 3.16 roa (during the last year had a delionquency to net worth of 170%, does anyone really believe the moves made are NOT one time and non-recurring?).
    cu4- 5.9 net worth, 68% delinquency to net worth, 4.03 delinquency to asset, -.98 roa.
    cu5- 7.1 net worth, 84% delinquency to net worth, 5.99 delinquency to asset, -.24 roa.

    this post wonders, not why arrowhead was finally conserved, but why these and many others have not been conserved.
    this post wonders why conserved and not closed.
    this post also wonders why over 10 corporate cu's with NEGATIVE EQUITY, arent conserved or shut down.
    and, most of all, this post wonders whether cu's understand what the lack of transparency is all about and what it will cost them in future assessments.



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