We are quickly approaching the one year anniversary of the last U.S. bank failure (December 15th). The last time we went this long between bank failures was the 31 month stretch from July 2004 through January 2007.
We only wish we could say the same for the nation’s credit unions. On October 12th, Radio, Television and Communication F.C.U., Staten Island, NY became the 8th federally insured credit union liquidation of 2018. (In addition to the six that are noted in bold on page 7, two others were shuttered in the first half.)
Credit unions did not run into the same problems that banks did with subprime mortgages and delinquencies (2008-2012) and it shows. The problems facing credit unions are much more apt to target a single institution (poor management, for example) or a small group of institutions with similar fields of membership (like those servicing the taxi industry in New York City).
There are currently 138 credit unions rated 2-Stars or below by Bauer, and therefore relegated to our Troubled and Problematic Credit Union Report ($99). On page 7 we list just the most dire, the 49 credit unions that, based on June 30, 2018 data, are either:
- Rated 1-Star or below and/or
- Rated 2-Stars but are less than Adequately-Capitalized by regulatory standards.
You will notice Zero-Star Ark City Teachers C.U., Arkansas City, Kansas was listed as “Critically-Undercapitalized”. We thought it was destined to be #9, but no. The faltering credit union found an acquirer before it was forced to shut its doors… and before the end of the third quarter. During September, Ark City Teachers CU became part of its much stronger neighbor: 5-Star Ark Valley Credit Union.
