Overwhelming Majority of CUs that Received Section 208 Assistance No Longer Active

The National Credit Union Administration (NCUA) reported that an overwhelming number of credit unions that received Section 208 assistance exited the credit union industry, according to the agency's emergency merger proposal.

In recent years, Section 208 assistance has taken the form of capital notes, cash advances, and non-cash guarantees.

Between the first quarter of 2001 and the fourth quarter of 2016, 181 credit unions received at least one type of section 208 assistance. Out of these 181 credit unions, 165 credit unions stopped filing Call Reports.

NCUA further noted that a vast majority of the credit unions that received Section 208 assistance exited the credit union industry prior to or shortly after receiving this assistance.

Of these 165 credit unions, 152 credit unions, or 92.1 percent, stopped filing Call Reports prior to or within 15 months of receiving the section 208 assistance.

Specifically, NCUA found that:

• 13.9 percent of the credit unions that received section 208 assistance began receiving such assistance after they filed their last Call Report. 
• An additional 61 credit unions filed their final Call Report in the same quarter in which they first began receiving section 208 assistance. 
• Another 68 credit unions filed their final Call Report within one year after the quarter they first received section 208 assistance

Based upon this evidence, NCUA believes that Section 208 assistance is a good indicator of a credit union being in danger of insolvency.