Tuesday, August 29, 2017

Less Than 20 Percent of CUs That Became Significantly Undercapitalized Are Still Active

Less than 20 percent of credit unions that become significantly undercapitalized are still active or independent, according to the National Credit Union Administration.

Over a 20 year period ranging from the second quarter of 1996 through the second quarter of 2016, 2,502 federally insured credit unions fell below the well-capitalized threshold (net worth ratio below 7 percent) after having a net worth ratio above that threshold for at least one quarter.

This indicates that over the 20 year period approximately one in five credit unions fell below the well-capitalized threshold.

The net worth ratio of 825 of these 2,502 credit unions fell below 4 percent -- the threshold for being significantly undercapitalized. Only 151 of these credit unions (18 percent) remained active.

The net worth ratio of 490 of these 2,502 credit unions eventually fell below two percent -- critically undercapitalized. Importantly, only 15 percent of those credit unions whose net worth dropped below two percent sometime in this period remain active.

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1 comment:

  1. AnonymousAugust 30, 2017 at 4:38 PM

    1400 that went below 7% then went away, failed, involuntary merged, whatever.
    Why would a regulator let it get that far?
    Only one answer, self preservation.
    Regulatory forbearance.
    Same reason they want to slow voluntary mergers.
    Inexcusable for congress to let this continue.

    ReplyDelete

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