PHOENIX — Using both its Website and a letter to members, the $1.9 billion Arizona Federal Credit Union went public this week on a $42.5 million mid-year "hit" of loan losses attributed to what its CEO said was the poor economic conditions in Arizona "impacting our members' financial well being on everything from job losses to meeting payments on the car loan."
While the numbers "are ugly," said President/CEO Ron Westad, the CU's overall 8.23% net and financial condition remains strong based on what he said are "multiple layers" of protection.
The state's second largest CU, which has seen its delinquencies soar to 3.4% at $48.3 million since severe problems in the Arizona economy first surfaced in March 07, retains its focus "not on us" but on restoring the financial health of "a group of" the CU's 230,000 members.
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Westad said the loan losses in 2007-08 reflect a "trickle down" effect from the weak mortgage market stressing in his web message that subprime or what he called "alternative" mortgage products had no part in the losses Arizona FCU was not making those kinds of loans.
"A small percentage of our members are facing financial difficulties brought on by mortgage loans they obtained elsewhere," wrote Westad. "Combine this with rising fuel prices, wage or job loss, falling home values and/or other economic forces, and this same group of members have been unable to fulfill their financial obligations related to car loans, credit card balances and equity loans."
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