The NCUA-managed Arrowhead Central CU added some padding to its well-capitalized status, reporting 7.69% net worth as of March 31, and a $7 million first quarter net income.
AEA FCU, which also operates under the conservatorship of the NCUA, also reported improved financial results for first quarter 2012.
The $245 million AEA reported net income of $839,096, and though still critically undercapitalized and supported by a $20 million subordinated note, net worth improved during the first quarter by 18 basis points to 2.85%.
The $715 million Arrowhead, which bottomed out at just 3% net worth in June 2010 after NCUA officials seized the credit union June 25, 2010, reported 7.69% net worth as of March 31, 2012. Loan quality improved to 4.57% in the first quarter–still well below the fourth quarter 2011 peer average of 2.5%–but a significant improvement from a high of 10.79% in third quarter 2009.
Provision for loan/lease losses dropped to $1.1 million annualized, down from nearly $4 million in first quarter 2011 and a high of nearly $80 million at year end 2009, a figure that was challenged by former CEO Larry Sharp and others shortly after the conservatorship.
The San Bernardino, Calif.-based Arrowhead’s return on average assets was 4.04%, up from 2.27% one year prior and a low of -6.97% ROA in third quarter 2009. The institution is also flush with cash, reporting more than $250 million, up from $144 million as of first quarter 2011. Investments fell to $34.6 million as of March 31, down from more than $50 million one year prior.
“Arrowhead Central Credit Union’s performance continued to improve during the first quarter as a result of the continued focus by new management on efficient service and operations, and sound lending practices,” said NCUA Spokesman John Zimmerman. “Loan loss trends show improvement but continue to be a challenge in this difficult local economy. With most numbers trending in the right direction, the credit union is steadily working through the problems that led to the conservatorship.”
The Yuma, Ariz.-based AEA’s loan quality improved to 6.8%, with delinquencies and charge offs falling from a high of 43.83% of loans during the first quarter of 2011. ROA took a dip to 1.41%, down from 2.77% as of September 30, 2011, but was still vastly improved from a low of -9.77% as of year-end 2010.
“Our goal for 2012 is to continue the efforts to transition AEA back to a financially strong credit union,” said Elizabeth Whitehead, NCUA region V director and agent for the conservator. “During the conservatorship, we reduced expenses, streamlined operations, and began the process of returning AEA to the fundamental credit union business model. We see significant progress in all of these areas, and we are very encouraged by the credit union’s continued positive financial results.”
During the first quarter, AEA completed a number of projects as part of a rebranding effort. It updated its website to enhance navigation, and introduced a new home banking website with next generation mobile/text banking, a dynamic suite of checking accounts with a photo debit card option, and a member-centric direct auto lending platform. Second quarter plans include release of an in-house Visa Credit Card program and joining the CO-OP ATM and shared branching networks.
The credit union failed as a result of insider loan fraud, for which a former vice president and his wife were found guilty. The two are scheduled to be sentenced later this month.