AEA Progresses But Have Problems with Bad Debt

Based on the call report of the credit union during the first quarter of this year, there are a few flickers of progress for AEA. The call report was put online this week in the website of National Credit Union Administration.

However, it is still struggling with bad debt and its net worth to total assets ration is still supported by a $20 million worth of cash infusion which NCUA gave to AEA during December.

According to NCUA public affairs specialist John Zimmerman, the credit union was supported by giving additional capital through a deposit, also known as subordinated debt. Consequently, AEA’s net worth to total assets ratio for quarter four 2011 was 2.69 percent.

At the end of March, AEA’s ratio was up to positive 2.85 percent. One year earlier, their ratio was minus 7.77 percent.

Moreover, AEA’s profit for quarter one 2012 was $839,000. That is in line with the profit-making trend observed during 2011, with a $6.2 million ending cumulative profit.

During quarter one 2012, AEA reported shares and deposits up by $11 million. But the membership is decreasing from 46,015 members one year earlier to 41,750 members this year.

Zimmerman added that AEA constantly developed its performance for quarter one and AEA is developing its net worth as well. For the month of March, it reported $7 million of net worth, which is an increase from $6.1 million during December. On the other hand, the credit union had minus $18.6 million net worth during March of last year.

AEA might be converting delinquent loans to foreclosures since there was a decline in the number of delinquent loans but an increase in the number of foreclosures.

During December, AEA had $8.9 million loans overdue by 12 months or more, but it was down to $2.4 million during March. In contrast, AEA’s foreclosed and repossessed assets reached $7.8 million during quarter one 2012, which is up from $2.1 million foreclosures in 2011.

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