The veteran CEO, ousted by the NCUA as part of the conservatorship, asserted that Arrowhead's downfall related to the very poor economy in California's Inland Empire east of Los Angeles, which became the vortex of the state's housing bust of 2009.

But Sharp, with 40 years in the credit union industry, called the latest Arrowhead loan allowance numbers puzzling. He maintained that the area, home to some of the biggest and most stable corporations in the state–"encompassing our membership"–belies a positive financial climate that the NCUA ignored in taking over the institution.

He cited as evidence the slight drop in the allowance for loan losses at $49.5 million a year ago to $47.8 million in the first three months, a 3.5% decline against loan delinquencies dropping from $20 million to $10 million.

"I have no idea why that allowance is that high, and I guess NCUA blames it on the economy," said Sharp, maintaining that such an allowance does not match current conditions even with 14-15% unemployment. There are other statistics in the report, he said, that also show Arrowhead was on the right path toward a recovery without the conservatorship.

Before and after the takeover, Arrowhead shed assets, employees and branches and cut loan losses to achieve its latest financial mark, but "it shows how we've tightened our belts and made sacrifices."

Elsa Montes, Arrowhead's marketing director, noted that the CU's 3.91% net worth climbed from 3.44% last December.

The NCUA brought in a turnaround team, including Kay Woods, who was recently named by the NCUA as interim head of the also-conserved $1.6 billion Texans CU of Richardson.

In February, the NCUA recruited Steve Becker as interim CEO of Arrowhead to replace Woods. He is the retired president of Credit Union West of Glendale in suburban Phoenix.

In its quarterly statement, Arrowhead attributed its higher income to "the improving quality of its loan portfolio" and said that the CU maintains "appropriate loan loss reserves to adequately cover the current risk."

"The economy has not fully recovered and the Inland Empire is still reporting over 14% unemployment," said Becker in its NCUA-sanctioned statement. "We anticipate continued above-normal loan losses over the coming months. We are reserving for those losses while taking strategic measures to enable the credit union to continue to regain its financial strength."

Since its collapse and the shuttering and sale of branches, including five to Alaska USA FCU, the California CU said it has reduced its staff by nearly half. It currently has 228 employees compared to its 449 peak. The CU has 130,000 members.

Sharp told Credit Union Times that overall it appears the NCUA "is doing far better than is reflected in the numbers" and is in essence engaging in "underreporting by keeping the allowance high." That same trend is also evident in improvement on delinquencies and collections, he said.

The ex-Arrowhead CEO said he is getting "a huge kick" out of working with students and faculty and serving as a liaison with community groups, but that he does miss the CU environment. However, he added, "I have absolutely no plans of going back."