The troubled $851 million Arrowhead Credit Union of San Bernardino, Calif. is selling off five of its branches to the $3.9 billion Alaska USA FCU, it was announced Thursday.
Arrowhead's net worth ratio dropped from 7.56% to 3.44% between December 2008 and December 2009. Its ROA was negative 4.87% as of yearend.
Under the proposed agreement, subject to regulatory and member approval, Arrowhead is shedding its High Desert facilities and member accounts in Victorville, Apple Valley, Barstow, Hesperia and Big Bear, to the Anchorage CU.
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Since last year, Alaska FCU has made its Southern California expansion plans well known having already merged two ailing CUs in the region, hard hit by the recession.
In a press statement, Arrowhead said with the sale of the five branches to Alaska USA, the credit union would see an increase in its net worth ratio from 3.44% to about 4.5% or an anticipated 80 basis points.
"This action, coupled with our recent trend of profitability, will have an overall positive effect on our financial condition," said Larry Sharp, Arrowhead president/CEO.
"We made more than $1 million in the first quarter and we're in a restructuring mode," said Sharp noting the San Bernardino CU last year reduced operating expense 40% and had previously closed four other branches and ended other unprofitable business lines including the credit union's auto repossession re-sale lot Arrowhead Motors.
Arrowhead "is on the right track" after an extremely difficult period, said Sharp.
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