AEA continues to slowly recover

As AEA Federal Credit Union approaches two years of being in conservatorship, it continues to slowly improve its net worth, according to its third quarter call report posted on the National Credit Union Administration website.

“AEA is making steady financial progress and still providing full service to the membership. The conservatorship process is designed to help credit unions recover, and that process is working,” said John Fairbanks, NCUA public affairs specialist.

However, the credit union's net worth continues to be propped up by the $20 million capital deposit it received from NCUA in December 2011. And its assets are still shrinking.

As of September, AEA's net worth to total assets ratio was 3.34 percent, a slight improvement from the second quarter's 3.15 percent but still well below the peer average of 10.24 percent.

AEA's current ratio reflects a total net worth of $7.75 million, up from $7.47 million in June. In comparison, the credit union's net worth was a minus $15 million in the third quarter of 2011, rising to a positive $6.16 million in January 2012 with the $20 million infusion from NCUA.

The credit union's assets totaled $231.9 million for the third quarter. They've shrunk since the beginning of the year, when assets were $245.1 million. At one time, the credit union's assets topped $400 million.

Meanwhile, AEA's net income was $1.58 million year-to-date for 2012 through September, 68 percent less than the $4.98 million during the same period in 2011.

The credit union also has fewer members, down from 43,751 in September 2011 to 41,543 this September.

On the other hand, AEA's bad debt and loan losses are down significantly from a year ago. Its percent of delinquent loans to assets was 0.54 percent for the third quarter. That compares with 2.23 percent in the second quarter and is a considerable improvement over the 12.27 percent for the third quarter of 2011.

Loan losses and charge-offs totaled $4.4 million for the third quarter, compared with $24.3 million during the same period in 2011.

But the credit union continues to hold considerable foreclosed and repossessed assets, a figure that actually has been increasing. For the third quarter, the foreclosed assets held by AEA totaled $8.6 million, up from $8.49 million in the second quarter. In comparison, it held $1.68 million in foreclosed assets in the third quarter of 2011.

AEA was placed into conservatorship by the NCUA in mid-December 2010 when its net worth/total assets ratio plunged to a negative 7.63 percent, making it insolvent.

The credit union had suffered millions of dollars in losses in its commercial loan portfolio, losses that were linked to fraudulent loans approved by its former business lending officer, William Liddle. He is serving 15 years in federal prison while his business associate, Frank Ruiz, is serving two years for their roles in the misuse of AEA funds.

Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853. Find her on Facebook at www.facebook.com/YSJoyceLobeck or on Twitter at @YSJoyceLobeck.