Ailing AEA 'Put Out Merger Feelers'
One of Arizona's troubled and undercapitalized credit unions, the $370 million AEA FCU of Yuma, acknowledged Monday it is closing a branch, downsizing staff and "put out merger feelers" but is still prepared to go it alone in 2010.
The southwest Arizona CU, located in a low-income, migrant area with 20%-25% unemployment, said it realizes the magnitude of its loan-loss and delinquency problems, but "we feel we've already made moves in our business loan area to get things under control," said Denise McGregor, executive vice president.
The CU lost $25.9 million last year, and its capital ratio is at 2.9%, putting it under close NCUA scrutiny.
McGregor said, "These are hard times, and we are not immune to the severe problems in our local economy," which has meant a mid-April closing of a downtown branch, one of six, and a 10% staff reduction from a base of 180 employees.
"We did feel it more important to keep our other branches in low-income areas open because of the need, whereas, we felt the downtown office lacked good access, and we could be better served by consolidating into our main office," said McGregor.
For months, she said, AEA has been in the process of shrinking assets as it "found some problems in our business loan area which we've fixed." The outlook, she said, is for more cutting back on loans.
AEA did "have a few responders" to some feelers put on a possible merger, but the fact is a nonperforming loan area does not appear attractive, so "we really feel we can pull out of this by doing the work ourselves," said McGregor.