The $876 million Arrowhead Credit Union can continue to process pending member business loan applications but not accept new ones, the NCUA said.
The instruction comes after Arrowhead was placed in conservatorship June 25 due to declining financial conditions, according to the NCUA. Member business loans are restricted under the prompt corrective action guidelines in the Federal Credit Union Act for credit unions that have net worth below 6%, said John McKechnie, NCUA director of congressional and public affairs.
As of March, Arrowhead's net worth was 3.36%, according to NCUA call report data.
The San Bernardino, Calif.-based CU had been restricted in their business lending since June 2009 when the cooperative went under PCA, McKechnie said. NCUA data as of March showed that Arrowhead's MBL activity had increased to 5.19% in the first quarter up from 2.34% in December 2009.
"While Arrowhead is in conservatorship, NCUA has determined this line of business is not in the best interest of members and does not make sense for the credit union," McKechnie said in a July 9 e-mail.
Arrowhead will continue to process any pending applications and will continue to service the MBLs currently in place including credit cards and SBA loans, McKechnie said. However, from this point on, the CU will no longer accept new applications.
A comment from Arrowhead was not immediately available.