Arrowhead Central Credit Union finished 2007 with strong financial results despite its geographic location in the “eye of the storm” – California’s housing bust. In preparation for a weakening economy, Arrowhead reduced operating expenses by 8.5% and balanced its loan portfolio. Arrowhead ended 2007 with a Return on Assets Ratio of 1.41% and a Capital Ratio of 9.64%. Arrowhead actively sold residential real estate loans into the secondary market, and spread portfolio growth among home equity, auto, recreational vehicle, and member business loans.
In 2008, Arrowhead sees opportunities to help members and to grow the Credit Union. Recent interest rate cuts by the Federal Reserve Bank will provide an opportunity for many members to refinance mortgages and reduce debt costs. Also, legislation to increase the maximum lending limits on mortgage loans will give members new sources of lower cost financing.
2008 will also present good opportunities for well positioned credit unions to capture new business. Major banks are already trying to increase their bottom lines at the expense of their customers, by increasing rates and fees. This creates a great opportunity for well-positioned credit unions to capture banks’ better consumer business and attract member business relations.
There is equal opportunity on the deposit side. The Federal Reserve’s interest rate cuts will help our bottom line by reducing our cost of funds and bringing more liquidity to the marketplace. This process will be helped by the uncertainty in the stock markets as members liquidate positions and wait for opportunities. Arrowhead is moving quickly to capture opportunities that will benefit its members and the communities it serves.