What happened to Arizona Federal’s commitment to serving the young, the poor, the underserved?

Is Ronald Westad and Arizona Federal turning its back on the young, the poor, and the underserved in our community? How is this mutually beneficial to society? Is the $3 per month and $36 per year weasel fee the right way to drive off the poor? Is this a proper way to “give back” to the community? Why is Arizona Federal acting more than a bank than a friendly credit union?

http://www.cutimes.com/2009/02/04/home-value-declines-drive-big-cu-losses-and-point-to-trouble-ahead
According to Westad, his institution’s commitment to serving the underserved was its undoing.
“Our member demography is a lower income and a younger membership base, and so where we are at currently is reflective of our commitment to serve these individuals, as they’ve been the ones hardest hit by this economic downturn,” he said.
Arizona’s job losses are typical with those suffered in the Sunbelt thus far, in the construction, retail and service industries, which are typically filled by young and poor workers.
AFCU has always managed higher delinquency and charge-off rates as a consequence of serving that market, Westad said, but up to this point had successfully offset credit risk by managing interest rate risk and following other asset liability management strategies. Historically, AFCU’s combined delinquency and charge-off ratio had run as high as 4% without affecting the bottom line. As of Dec. 31, that ratio stood at 13.04%.

http://www.cutimes.com/2009/01/23/westad-underserved-hit-the-hardest
PHOENIX – The $1.7 billion Arizona Federal Credit Union recorded a nearly $116 million net loss and placed $174.5 million in loan loss provisions as of December 31, 2008, resulting in an undercapitalized 4.75% ratio.

AFCU began 2008 with almost 11% capital. What happened?

According to President/CEO Ron Westad, his institution’s commitment to serving the underserved backfired when the real estate market turned south.

“Our member demography is a lower income and a younger membership base, and so where we are at currently is reflective of our commitment to serve these individuals, as they’ve been the ones hardest hit by this economic downturn,” he said.

In Arizona, the real estate bust has resulted in lost construction, retail and hotel/resort jobs, typically filled by young and poor workers.

AFCU has always managed higher delinquency and charge off rates as a consequence of serving that market, Westad said, but was able to offset credit risk by being more diligent in managing interest rate risk and following other asset liability management strategies. Historically, AFCU’s combined delinquency and charge off ratio had run as high as 4% without affecting the bottom line. As of December 31, that ratio stood at 13.04%.

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About Arizona Federal Credit Union Members United

Arizona Federal Credit Union Members United is a group of over 100 members and former members who care about our credit union being run fairly. The leadership of the credit union has failed to represent us properly by enacting a new and unnecessary, unavoidable, unconscionable, $3 monthly membership fee that we did not want. The members did not ask for this. Before implementing such a counter-productive fee, the proposal should have been put up for a vote to all the members to decide, so the will of the people is followed. The member-owners of Arizona FCU should not be taxed $3 monthly, simply for being a member. We want all the $3 monthly member fees refunded to all current and past members, the elimination of the fee going forward, and the elimination of the $25 rejoining fee. We are against any financial institution charging an unavoidable ongoing membership fee, simply for being a member. This is the wrong approach. Members and customers should be valued, not punished. We want to see Arizona FCU succeed, not fail. Imposing unfair policies that are detrimental to the long-run success of the credit union and detrimental to society should be abolished.
This entry was posted in principles, values, listening to members, profits and losses, Ronald L. Westad, underserved and tagged , , , , , , . Bookmark the permalink.

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