Former Lafayette Federal Credit Union CEO Bill Brooks said he thinks Arrowhead Central Credit Union's board should have filed a formal objection to the NCUA's June 25 conservatorship.
Brooks, lead plaintiff in a 1995 lawsuit protesting the NCUA's seizure of Capital Corporate FCU, questioned the NCUA's claims Arrowhead management had been inconsistent with loan loss reporting.
"That would lead you to believe that when the NCUA took over, they had to charge off a bundle," he said. Rather, net charge-offs to average loans rose only slightly, from 5.43% to 5.49% from first to second quarter 2010. Delinquencies inched up to 3.08% as of June 30, compared to Sharp's 3.03% reported in March.
Brooks agreed with Sharp, who told Credit Union Times delinquencies and charge offs had peaked and were dropping, and Sharp was justified to make modifications to his loan loss provisioning estimates. He also agreed with Sharp's estimation that Arrowhead's 282% loan reserve coverage ratio may be the highest in the country.
"The NCUA would have been taken to the woodshed in court," he said, but Arrowhead's volunteers missed the required seven-day window after seizure.
The former examiner Brooks also had harsh words for Arrowhead, criticizing compensation compared to peers, and saying dismissed management deserve to join the NCUA in the woodshed for making loan underwriting decisions that lead to last year's 7% charge off ratio.