SAN BERNARDINO, Calif. – In an unusual move, NCUA after seizing Arrowhead Central CU Friday night put the top managers at the one-time $1.1 billion credit union on paid administrative leave, even as the federal agency was dismissing the board and supervisory committee, as it does in most conservatorships.
Among those put on paid leave were chief financial officer Daniel Marcicente, senior vice president of lending Gene Shabinaw, senior vice president of strategic development Ray Messler, and well-known CEO Larry Sharp, who has run the credit union since 1982.
While board and management are usually dismissed after an NCUA takeover, officials with the agency say the arrangement with the Arrowhead managers is not unheard of. “Retaining certain employees initially is not unusual, particularly since NCUA is in the process of a thorough review of credit union operations,” John McKechnie, chief spokesman for the agency told the Credit Union Journal over the weekend. “NCUA is focusing on maintaining stability and uninterrupted service to members, and protecting member assets, all of which may be enhanced by the retention of certain employees.”
Under the conservatorship NCUA has several options, including nursing the troubled credit union back to health, finding a merger partner for it or liquidating it, according to McKechnie.
Credit union officials could not be reached over the weekend.
NCUA takeover of the troubled institution came the day before Arrowhead was scheduled to complete the sale of four branches to Alaska USA FCU for roughly $7 million. However, the additional capital would still leave the $875 million credit union with just a 3.4% net worth ratio, considered critically undercapitalized under NCUA’s minimum capital rules, known as prompt corrective action, or PCA.
The NCUA action serves as a downfall for the 68-year-old Sharp, a major credit union figure who is an important leader in the local business community and among the state’s credit unions, having been named the California CU League’s Leo H. Shapiro Lifetime Achievement Award winner in 2008. Sharp, who has worked in the credit union movement for 45 years, was awarded an honorary degree from the University of California last year for his service to the local community. Under Sharp, Arrowhead has won numerous honors for its outreach to the underserved and the area’s Latino community.
But the credit union ran afoul of the state’s poor real estate market, wracking up losses of $28.6 million for 2008 and $47.1 million for 2009, even while breaking into the black for the first quarter of $2.6 million.
Arrowhead is the second-biggest conservatorship ever for NCUA, behind only last year’s takeover of $2.4 billion Eastern Financial Florida CU, which was eventually merged into Space Coast CU.
Arrowhead was chartered in 1949 to serve employees of San Bernardino County employees, and eventually expanded to serve all residents of San Bernardino and Riverside counties.
