NCUA: Large Credit Unions Showing Signs of Stress

Liquidity, interest rates and credit risk contributing to problem.

David Baumann


Nov 16



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David Baumann

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David Baumann

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National Credit Union Administration

Large credit unions are exhibiting signs of stress and weakness that could blossom into a larger problem for the NCUA, board chairman Todd Harper said Thursday.

“For several months, the NCUA has reported signs of growing liquidity, interest rate, and credit risks within the credit union system,” Harper said. “In today’s report, we see that stress firsthand, especially in large, complex credit unions with $500 million or more in assets.”  

In a presentation at Thursday’s monthly board meeting, NCUA CFO Eugene Scheid used the CAMELS rating system, which grades credit unions from a 1, reserved for credit unions with no weaknesses, to 5, reserved for very poorly managed institutions that easily could fail without outside intervention.

CAMELS Rating Analysis

Scheid said that the total assets of credit unions with a 3-rating increased from $91 billion in June to $131.7 billion at the end of September. Credit unions with a 3 rating are those that “exhibit some degree of supervisory concern in one or more of the component areas,” according to an NCUA outline of the CAMELS system. “These credit unions exhibit a combination of weaknesses that may range from moderate to severe.”

In addition, the number of large, complex credit unions with a CAMELS code 3 rating increased by nine credit unions to a total of 51 credit unions in the third quarter of 2023.

“If not addressed quickly by credit union management, these problems could escalate into composite CAMELS code 4 and 5 ratings and even failures,” Harper said.  

Harper additionally made a pitch for the increased examination staff contained in the agency’s draft 2024 budget.

“Some may not like the size of the increase proposed in the staff draft budget, but it is our job to protect credit union members and the system,” he said.

Credit union trade groups have criticized the budget, saying that additional consumer protection examiners contained in the document are not needed.

Hauptman: Strength Demonstrated

Board Vice Chairman Kyle Hauptman noted that credit unions have exhibited strength during the past several months.

“I want to stress that credit unions have demonstrated stability and resilience in the face of economic challenges,” he said.

Board member Rodney Hood said Scheid’s report “really brings to light the importance of credit unions needing to be vigilant about fundamental enterprise risk management processes.”

In other business, the board adopted a final rule that adds military and veterans’ groups to the list that credit unions may make contributions to using a charitable donation account.


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