Arizona CU Problems Focus of Media Coverage
The earnings woes of Arizona credit unions--95% of them lost money in the first quarter--drew high-profile media coverage over the weekend, including the headline, "Arizona Credit Unions Hard Hit in First Quarter."
The news story in The Arizona Republic, described by staffers at the Arizona Credit Union League as "fair and factual," compared the CU losses to those of banks of which 75% had losses during the same period.
The news story quoted Scott Earl, Arizona Credit Union League president/CEO, and Ron Westad, president/CEO of the struggling Arizona FCU. It detailed the severe "member pain" in the state from staggering loan losses in real estate, consumer bankruptcies and job cutbacks. It also mentioned that corporate legislation has cleared the way for CUs to stretch out NCUA payments over seven years.
That action will allow CUs to restate first quarter results "in a more positive fashion," the article said. The Arizona Republic article also noted that more than one-third of the 54 CUs lost more than $1 million each in the first quarter, "a sizeable setback for institutions that tend to be smaller than banks."
The article, which listed the high delinquencies and charge-off ratios of some of the biggest CUs, cited the $48 million loss absorbed by Arizona FCU. Westad acknowledged branch closings, staff cuts, tightened loan standards plus reduction in TV and newspaper ads.