10:00 PM PST on Monday, February 7, 2011
By KIMBERLY PIERCEALL
Arrowhead Credit Union, under government control since June 25, had fewer assets, employees and members by the end of 2010 compared with a year ago.
The number could drop further in the first quarter since the agency announced it would close eight branches by the end of last year.
As of December, Arrowhead had $671.4 million in assets compared with $849.3 million last year. The credit union lost $4.5 million last year, less than the $47.1 million lost in 2009. The number of employees was nearly cut in half.
The credit union also had 21,007 fewer members, a 13.6 percent drop, compared with a year ago. Unlike banks, credit unions are member-owned.
National Credit Union Administration officials have said they seized Arrowhead in late June because of its declining financial condition and before former managers could sell off assets for too low a price.
Despite the losses, spokesman John McKechnie said the NCUA was pleased with a fewer number of delinquent loans, 303 compared with 911 a year ago, amounting to $11.2 million rather than $23.8 million at the end of 2009.
“Arrowhead Credit Union is showing signs of progress. Net worth is at 3.3 (percent), ahead of projections, and loan delinquencies have declined,” said McKechnie in an e-mail.
“The difficult economic climate has affected lending, but the cost-cutting measures that we have implemented have put the institution on a path for recovery,” he said.
Employee compensation and benefits dropped by $8.4 million and education and promotional expenses were cut by close to $1 million, among other reductions.
The NCUA set aside $49.2 million last year to cover possible loan losses, about 8.9 percent of the credit union’s total loan portfolio.
The credit union’s net worth ratio, essentially its earnings and reserves divided by its total assets, was stable at 3.3 percent compared with 3.2 percent a year prior which is still considered significantly undercapitalized.
The agency considers a credit union with a 7 percent net worth ratio well capitalized.
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