The $876 million Arrowhead Credit Union can continue to processpending member business loan applications but not accept new ones,the NCUA said.

The instruction comes after Arrowhead was placed inconservatorship June 25 due to declining financial conditions,according to the NCUA. Member business loans are restricted underthe prompt corrective action guidelines in the Federal Credit UnionAct for credit unions that have net worth below 6%, said JohnMcKechnie, NCUA director of congressional and public affairs.

As of March, Arrowhead's net worth was 3.36%, according to NCUAcall report data.

The San Bernardino, Calif.-based CU had been restricted in theirbusiness lending since June 2009 when the cooperative went underPCA, McKechnie said. NCUA data as of March showed that Arrowhead'sMBL activity had increased to 5.19% in the first quarter up from2.34% in December 2009.

"While Arrowhead is in conservatorship, NCUA has determined thisline of business is not in the best interest of members and doesnot make sense for the credit union," McKechnie said in a July 9e-mail.

Arrowhead will continue to process any pending applications andwill continue to service the MBLs currently in place includingcredit cards and SBA loans, McKechnie said. However, from thispoint on, the CU will no longer accept new applications.

A comment from Arrowhead was not immediately available.