Former Arrowhead Central Credit Union President/CEO Larry Sharp said the NCUA refused four consecutive net worth restoration plans because Arrowhead management was "too optimistic" in its forecasting.
The California State Department of Financial Institutions did not reject the state-chartered institution's plans, he said.
"We have beaten every one of our forecasts in performance," said Sharp, who was fired by the NCUA July 14 along with three other executives. The NCUA seized the $808 million Arrowhead June 25.
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In a July 22 release that announced adjustments the NCUA made to Arrowhead's reported financial condition, the regulator said management had not charged off loan losses in a timely or consistent manner, historical ratios had not consistently reflected actual losses, and the credit union did not adhere to GAAP accounting standards.
Sharp said his team switched from a 12-month to six-month historical period to determine first quarter 2010 loan loss reserves, because Arrowhead had experienced nine consecutive months of dropping delinquencies and six consecutive months of dropping charge offs. Sharp called the decision "perfect acceptable according to GAAP."
McKechnie disagreed, saying the methodology change was not approved by Arrowhead's own external auditor. The NCUA said in its July 22 release the $12 million increase to Arrowhead's loan loss reserves was "in accordance" with that auditor's October 2009 report.
"I think they're stuck in 2009, and 2010 is totally different," Sharp said of the NCUA.
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