San Bernardino – More than dozen years ago, local banks fought the loosening of Credit Union rules allowing them to compete directly with banks. Arrowhead Credit Union was one of the most aggressive in applying those new rules.
“On June 25, 2010, the National Credit Union Administration (NCUA) placed your credit union into conservatorship. As a result of this action, your credit union’s assets and operations have been placed in my control as the credit union’s Agent for Conservator.” – http://www.arrowheadcu.org/index.cfm?ArticleID=37
Last week federal regulators removed the key officers of the Credit Union, including President Larry Sharp a long time high profile community figure. Undoubtedly the bad economy in the Inland Empire has brought out the warts in many businesses. But Arrowhead Credit Union had long been moving aggressively into other lines of businesses as well. Several years ago, they attempted to start a commercial bank, and then they bought an insurance company, Sawyer Cook, lines of businesses perhaps outside the expertise of a credit union. Credit Unions are owned by depositors, as “members.” While the members do vote on leadership, managers still have a special responsibility to be conservative like mutual life insurance companies.
Arrowhead is the second-largest retail credit union to be taken over by regulators. With $876 million in assets, Arrowhead has 24 branches. Over 60 years old, Arrowhead Credit Union lost over $70 million in 2008 and 2009.
A strong community supporter, even if it is purchased by another credit union, the support in the community will probably not be the same. It has been generous to many community originations. Arrowhead Credit Union is member owned, if it fails completely it will be the member’s money that was really used for the community, not management’s.