Wednesday, May 29, 2013

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.

No comments:

Post a Comment

 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.