Andrew Edwards and Ryan Carter, Staff Writers
Posted: 07/22/2010 06:59:42 PM PDT

SAN BERNARDINO – Arrowhead Credit Union’s financial condition remained in a weakened state through the first half of 2010, according to government regulators who recently put the institution into conservatorship.

The National Credit Union Administration on Thursday released new financial numbers for Arrowhead Credit Union. Regulators’ figures show the credit union has been “significantly undercapitalized” and losing money.

The credit union’s key capital ratio was merely 3 percent as of June 30, according to the new numbers. That figure represented a drop from 3.36 percent at the end of March.

Credit unions’ capital ratio must be no lower than 7 percent for institutions to be considered “well capitalized” under federal law.

The National Credit Union Administration also reported that Arrowhead’s managers did not use accepted methods to calculate expenses related to bad loans. In the government’s eyes, proper accounting wipes out previously-reported earnings and shows Arrowhead lost $1.4 million through the end of June.

“The results speak for themselves. We’re continuing to run the institution for the benefit of the members and continuing to address its problems,” National Credit Union Administration spokesman John McKechnie said.

McKechnie said he could not guess as to whether Arrowhead’s prior managers were pumping the credit union’s numbers.

Larry Sharp, Arrowhead Credit Union’s former chief executive officer, said Thursday that he had not yet seen the new data and declined to comment until he could digest the information.

The National Credit Union Administration put Arrowhead Credit Union into conservatorship in June. The credit union lost $47.1 million in 2009 and $28.6 million the previous year.

To read entire story, click here.