Nearly a month after it was placed into conservatorship by the NCUA, Arrowhead Central Credit Union has been prohibited from accepting any new member business loan applications.
"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," said John McKechnie, NCUA director of congressional and public affairs.
The $876 million Arrowhead in San Bernardino, Calif., will continue to process any pending applications and will continue to service MBLs, SBA loans and credit cards currently in place, McKechnie said.
Member business loans are restricted under the prompt corrective action guidelines in the Federal Credit Union Act for credit unions that have a net worth below 6%, McKechnie said. As of March, Arrowhead's net worth was 3.36%, according to NCUA Call Report data.
Arrowhead had been restricted in its 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.
The NCUA had previously discovered that Arrowhead had posted inaccurate financial data in its March 2010 Financial Performance Report, specifically regarding losses in the loan portfolio. The CU's declining financial condition presented a safety and soundness concern prompting its June 25 conservatorship. Credit Union Times previously reported that Arrowhead's executive team was placed on paid leave rather than being removed.
--msamaad@cutimes.com
