Despite Claims of Recovery in Progress, Arrowhead Taken Over
SAN BERNARDINO, Calif.-In an unusual move, NCUA after seizing Arrowhead Central CU last week, put the top managers at the one-time $1.1-billion CU on paid administrative leave, even as the federal agency was dismissing the board and supervisory committee.
Among those put on paid leave were CFO Daniel Marcicente, SVP-Lending Gene Shabinaw, SVP-Strategic Development Ray Messler, and well-known CEO Larry Sharp, who has run the credit union since 1982. NCUA has tapped Kay Woods as interim CEO. Woods was formerly CEO of Las Vegas-based WestStar CU before leaving to work as a consultant. She has experience working as a manager of institutions in conservatorship, according to NCUA. Other senior execs have also been brought in.
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," said John McKechnie, chief spokesperson for the agency.
NCUA has several options, including nursing the troubled CU back to health, finding a merger partner, or liquidating it, according to McKechnie. NCUA's takeover of the troubled institution came the day before Arrowhead completed the sale of four branches to Alaska USA FCU for roughly $7 million. However, the additional capital still left the $875-million CU with just a 3.4% net worth ratio.
The credit union, originally chartered in 1949, ran afoul of the state's poor real estate market, racking 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.