More bad news for AEA credit union
AEA Federal Credit Union's financial picture continues to deteriorate, with its net worth/total asset ratio now a negative 7.63 percent — making it insolvent.
The peer average for credit unions is a positive 10 percent.
Cherie Umbel, a spokeswoman for National Credit Union Administration (NCUA), said Monday that she couldn't discuss the financial status of an individual credit union such as AEA because of confidentiality regulations.
However, she said, AEA members may rest assured it is business as usual under NCUA's conservatorship. And their money is “safe and secure,” she said, explaining that each account is insured up to $250,000 by NCUA.
The growing business loan losses at AEA have erased all capital at the one-time $410 million credit union and forced it to report a $31 million loss of net income for 2010, according to the fourth-quarter 2010 call report just posted on www.NCUA.gov.
AEA's assets are now listed at $261.7 million, a steep decline over the past two years. In September, the assets were listed at $309 million and net worth ratio at 2 percent.
In other bad news in its latest call report, AEA listed $36.3 million in loans 60 days or more past due, foreclosed and repossessed assets of $20.5 million, and $30.9 million in loans subject to bankruptcies.
In December, former business loan director William Liddle and his wife, Rhonda, were indicated by a federal grand jury on charges of making millions of dollars in risky member business loans in exchange for more than $1 million in kickbacks. Local businessman Frank Ruiz also was indicted.
After being on NCUA's watch list for months because of mounting real estate losses, AEA was placed under conservatorship in mid-December. Thomas Martin, a former CEO of now-merged Continental FCU of Tempe, has been acting as the conservatorship CEO.
NCUA is the federal regulatory and insurer agency for credit unions.
AEA is one of various credit unions currently being run under NCUA conservatorship, including California's Arrowhead Central CU, Family First CU in Utah and Keys FCU in Key West, Fla. AEA and Family First are insolvent with net worth ratios of -7.63 percent and -10.49 percent, respectively
On the other hand, Family First is half the size of AEA with $119.3 million in assets, $4.3 million in delinquent loans of 60 days or more and $2.7 million in foreclosures. In contrast, the much larger Arrowhead, with $671.4 million in assets, listed $11.2 million in delinquent loans and $3.3 million in foreclosures.
As for the future of AEA, Umbel said the options are merger, liquidation or resolving the credit union's financial problems and returning it to local control.
One scenario would be for NCUA to liquidate AEA and assume its losses. Another credit union would then take over AEA's assets and membership in a process called purchase and assumption.
For example, the $4 billion Alaska USA Federal Credit Union took over the assets of the failed High Desert FCU in Apple Valley in 2009 after the California-based credit union suffered millions of dollars in construction loan losses.
Joyce Lobeck can be reached at firstname.lastname@example.org or 539-6853.