SAN BERNARDINO, Calif.- Arrowhead CU will close four branches effective Feb. 7, the $1-billion CU said.
As a result of the closures, Arrowhead is reducing its 558-person workforce by 29 positions. The CU has identified 10 unfilled positions in-house where some of those employees may be transferred.
The announcement came as Arrowhead CEO Larry Sharp was in Washington meeting with Treasury Department officials and members of Congress to discuss the "competitive inequities" resulting from credit unions' having been left out of the $700-billion Troubled Asset Relief Program (TARP).
Indeed, Ted Kim, Arrowhead's VP-marketing, blamed the branch closures and layoffs on the lack of TARP funds. "As with any institution, we are feeling the impact of the economy," he told CU Journal. "There has been an inequity in release of funds in that credit unions have not received any funds. Credit unions operate on a local level and are very transparent, and our CEO, Larry Sharp, wanted to speak out about this inequity.
"If some of those funds were available, we would not have to have made some of the proactive steps we have taken," he added.
Arrowhead said credit unions were included in the original TARP language, but so far, more than 280 healthy and ailing banks have shared in $277 billion supplied by TARP while credit unions have gotten nothing.
"It's mind-boggling that TARP is overlooking non-profit credit unions like Arrowhead, which, as a central element of our nation's financial network, supply small businesses and others with crucial capital," Sharp said in a prepared statement. "The banks won't even reveal to the public how they have been using their TARP funding."
Kim said a number of factors were examined before deciding to close branches. "The most important thing was making the least impact overall to the membership," he explained. "Additionally, we took every measure to ensure members who would be directly affected would still have access to ATMs. We considered the shared branch network and the ability of members to access their accounts through that."
Arrowhead, which suffered a $3 million loss in the third quarter of 2008 but has reserves of 9.7%, has instituted a "top-to-bottom cost-cutting effort" that includes:
* Reducing the operating budget by 10%
* Sharp's salary will be cut 17%
* Postponing new branches
* Slashing travel, education and community development budgets.
Asked if the precipitous fall of real estate values in Arrowhead's service area has stopped, Kim said it is difficult to say if the bottom has been reached.
"Foreclosures and layoffs continue, so it is important to act prudently and assume the problem is not over," he assessed. "There was a big housing boom in the Inland Empire four or five years ago, and we are still feeling the pinch of that ending. If credit unions were to see an infusion of funds through TARP, we are confident they would push that money back into the local economy."
