06:47 PM PDT on Monday, June 28, 2010
By KIMBERLY PIERCEALL
The federal agency that seized Arrowhead Credit Union on Friday defended its decision after community and business leaders said the credit union’s financial condition was showing signs of improvement.
That’s not the case, said National Credit Union Administration spokesman John McKechnie.
“The credit union was not reversing negative trends and was not on a trajectory to return to profitability,” McKechnie said in an e-mailed statement. “The most prudent course of action was for NCUA to assume control of Arrowhead in an effort to prevent further losses and preserve member assets.”
San Bernardino Mayor Pat Morris said Saturday that he thought the credit union’s financial situation was improving and didn’t understand the agency’s timing. Bob Cameron, CEO of Visterra Credit Union in Moreno Valley, said Friday that he was surprised by the takeover and believed Arrowhead’s reserves had been increasing. Arrowhead recorded a $2.6 million quarterly profit in March.
McKechnie said the sale of two Arrowhead branches and the lease transfer of two others to credit union Alaska USA that closed on Saturday wouldn’t have made a difference and the deal didn’t factor into the agency’s decision to place Arrowhead under conservatorship.
“Any income derived from the sale of these branches was not sufficient to remedy the credit union’s poor financial condition and offset ongoing deterioration in Arrowhead Credit Union’s loan portfolio. In fact, losses at Arrowhead were continuing,” he said.
McKechnie wouldn’t say how much the credit union earned from the sales and transfers but news reports before the credit union’s seizure said the deal was worth several million dollars.
To read entire story, click here.