PHOENIX — In the wake of the weekend failure of three Western banks all part of a $3 billion Arizona holding company coupled with the $42.5 million midyear loss of Arizona Federal Credit Union, CUs here, in Nevada and in California were girding Monday for more safety and soundness queries from the public and members.
"I wouldn't say we've been flooded with questions but I know we have been getting telephone calls and e-mails at our branches," said a spokesman for the $3.1 billion Desert Schools FCU, the state's largest, which since the IndyMac collapse two weeks ago has posted assuring messages from the CU chairman, Dr. Claudette Gronski.
And in Reno, where the 1st National Bank of Nevada was closed by regulators on Friday CUs reported only a modicum of inquiries about deposit insurance "although it's still a little early," said Tony Lopez, chief financial officer of Great Basin CU, noting the local media has been extra careful about stressing deposit safety under the new owner Mutual of Omaha Bank.
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Under the regulatory-ordered takeover by the FDIC, and Comptroller of the Currency, the insurance company-owned bank also acquired First National Holding Company of Scottsdale and First Heritage Bank of Newport Beach, Calif. The Scottsdale, Ariz. BHC ran into troubles, said regulators, over large losses in its "alternative" mortgage portfolio.
Meanwhile, top management of Arizona FCU and the Arizona Credit Union System were fending off their own set of member queries following news articles about Arizona FCU and what were described as "financial problems" now spread to CUs, a point quickly refuted by industry leaders. Arizona FCU itself drafted new Web site "Ask Ron" messaging assuring members the CU capitalized at 8.23% was in no financial danger. Ronald Westad is president/CEO of the CU.
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