AEA Federal Credit Union loan delinquencies surge in 2nd quarter

August 11, 2010

AEA Federal Credit Union loan delinquencies surge in 2nd quarter

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  • July 1, 2010

    AEA press release

    AEA press release

    FOR IMMEDIATE RELEASE Contact: Denise Sweet-McGregor, Chief Executive Officer AEA Federal Credit Union 1780 S. First Avenue, Yuma, Arizona 85364 Direct: 928.343.0219 Mobile:More >>

Yuma, AZ August 13 -- The financial status of AEA Federal Credit Union has further deteriorated in the second quarter.  The Yuma and La Paz County credit union's financial report (known as a Call Report in the financial industry) for second quarter has been published. 

The information found in Call Reports is required by law.  All regulated financial institutions in the United States are required to file periodic financial and other information.  AEA and all federally chartered credit unions are supervised by the National Credit Union Administration. 

During my research on how to read and interpret Call Reports I learned one of the first things to evaluate is the "net worth/total assets" ratio.  This ratio measures the level of capital available to protect credit union operations and member savings from risk.   

In AEA's case the numbers are grim.  In June of last year, AEA reported a net worth ratio of 8.38%.  Then in June of 2010 the credit union's net worth ratio plummeted to 2.73%, a 67% drop.  Financial institution experts tell me the minimum net worth ratio for an adequately capitalized credit union is 6%.  Accordingly, AEA is now considered under-capitalized.  Ideally, a credit union's net worth ratio should hover around 8-10%.  AEA's numbers are among the worst in the state.

During the past 12 months AEA's delinquent loans have surged according to the Call Report.  In September of last year, AEA reported a loan delinquency ratio of 2.48%.  In the subsequent quarters the number doubles each time, ending with a spiked loan delinquency ratio of 21.06%.  

By looking at the call sheet it appears AEA's business loans are the most delinquent.  In June of 2009 AEA had 633 business loans on its books. Fast forward to June of 2010… only 354 business loans.  While the number of business loans has decreased, the delinquency percentage on those loans has increased by 91% in the last year.  To put it more simply, 354 business loans account for 51.5 million dollars in loan payments that are more than two months delinquent.

Comparison

To put these numbers in perspective I did some research on another credit union similar to AEA Federal Credit Union. 

Sun Community Credit Union (charter #9296) in El Centro, CA has 52,638 members(AEA has 53, 139) and is in a comparable market to Yuma.

Sun Community's net worth in June of last year was 8.80%.  In June of 2010 the credit union reported a new worth ration of 9.36%. 

How to access Call Reports

The Call Reports are published quarterly on the National Credit Union Association website.  Click here to access the search engine on the NCUA website.  Another window will open.  You will have to search for AEA by typing in the credit union's charter number (AEA is #4915), or you can simply search for all credit unions in Yuma, AZ. 

For some reason, the search on the NCUA website will not pull AEA's Call Reports if you search for the credit union by name. 

If you have problems, feel free to email me.  I can help you navigate the NCUA website.

History of AEA Credit Union in the news

AEA Federal Credit Union has been the topic of rumors for months in Yuma County.  In a phone conversation in June, AEA Federal Credit Union CEO Denise Sweet-McGregor confirmed the FBI was involved in an investigation that involved AEA, but she would not elaborate.  The following day she recanted that statement via email.  She will not agree to an on-camera interview either, citing confidentiality concerns.

In a phone conversation in June, the director of the credit union board, Ray Drysdale, pointed to the poor economy and some decisions made by the board that lead to the problems at AEA.  Drysdale has been on the board of directors for 35-years and says AEA has made great contributions to the community and he says the credit union is still solvent.  Mr. Drysdale also said believes the credit union will pull through and be okay. Drysdale will not agree to an on-camera interview either.

Late last year, the credit union's business loan officer Bill Liddle left AEA.  It's unclear if he was forced out or resigned.  Liddle has been the subject of an FBI investigation, according to several unnamed sources.  At this time Liddle has not agreed to go on camera with KSWT.

Yuma night club files Ch. 11; blames AEA

Four months after opening, Top of the Kress, a bar on Main Street in downtown Yuma filed Chapter 11 Bankruptcy in July. The owners Frank and Mark Ruiz say The Kress will reorganize their finances under Chapter 11 and will remain open.

The business employs more than 50 people.  The owners said last month that no one will be laid off.

Mark Ruiz blamed AEA for the bar's financial troubles.  In a statement released to KSWT in June, "By taking this protective step it ensures us that The Kress will continue to be open and running our business as usual. This step forward was caused by the continued financial troubles of AEA Credit Union and their decision to cut off many of their client's lines of credit."

We contacted AEA CEO Denise Sweet-McGregor for comment.  She said it is the credit union's policy to not comment on their members out of respect for their privacy.

Former owner of T & K Auto charged with theft, fraud

Most recently, Ken Stevenson the former owner of T & K Auto in Yuma was arrested in San Luis, AZ.  Stevenson has been charged with theft and fraud.  His bond hearing has been moved to next week.

According to court documents the fraud charge pertains to selling cars with unsecured titles owned by AEA.

T & K Auto closed late last year.  The used car dealership specialized in the sale of used high-end luxury vehicles such as Mercedes-Benz, Lexus, Hummers and Cadillacs. 

The Yuma County Sheriff's Office has been investigating a fraud complaint about Stevenson's dealership since December of last year.  The sheriff's office will not talk on camera about the investigation.  They will only say that it is on-going.

Is your money safe?

Since KSWT began investigating the financial status of AEA Federal Credit Union many viewers have called asking how credit unions work and if their money is safe.  The government insures credit union accounts up to $250,000.  For more information on the insurance and how it works, click here.

According to experts in the industry, it is rare that a credit union closes.  Usually they merge with another credit union or are operated by federal regulators until it adequately capitalized.

It is important to point out, Sweet-McGregor contends that your money is safe at AEA, as each account is backed by the federal government up to $250,000.

by: Shannon Maze, News Director

 

 

 

 

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