2013 Insured Depositor Payoffs Ahead of Last Year's Pace

So far this year, the pace of credit union failures involving insured depositor payoffs is running ahead of last year's pace.

In 2013, six of the seven credit union liquidations have involved insured depositor payoffs. It would have been seven out of seven; but Kinecta acquired I.C.E. Federal Credit Union several days after NCUA had liquidated the credit union.

In comparison, there were only six credit union failures in 2012 that involved insured depositor payoffs.

As a general rule, insured depositor payoffs tend to be more expensive to the insurance fund than purchase and assumption agreements.

There are several possible reasons for the 2013 pace to be ahead of the 2012 pace. These failures arose out of the blue and did not give NCUA adequate time to shop the failed credit union. The insured depositor payoffs involved small credit unions that have very little franchise value and thus were not attractive to potential bidders.

I will be interested to see if this trend of insured depositor payoffs continues for the remainder of 2013.