PHOENIX – Among all of the emerging turnaround stories for one-time troubled credit unions, none may be more impressive than that of Arizona FCU – a one-time $1.9-billion credit union which reported a $45 million net for 2011 after teetering on the brink the past three years.
The credit union lost $116 million in 2008, and $160 million over the ensuing three years, pushing its net worth down to 2%, normally low enough for NCUA to take it under conservatorship. The situation was so dire, NCUA made Arizona Federal one of 10 big problem credit unions subject to a special NCUA work-out team.
Huge loan charge-offs over the past three years have allowed Arizona Federal to trim its provision for loan losses by a whopping $64 million last year, producing the large gains and helping it raise its net worth ratio all the way up to 6.5% at year end.
In a year-end message to members, Ron Westad, president of the now $1.2-billion credit union, said he expects the improvement to continue and net worth to reach 7% by mid year. He said some problems still remain, including a high delinquency ratio of 2.7%.
