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Flurry of credit union conservatorship, closure activity late in quiet 2022

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Flurry of credit union conservatorship, closure activity late in quiet 2022

In a one-week span between Sept. 30, and Oct. 7, the U.S. National Credit Union Administration put two credit unions into conservatorship and closed another in what had otherwise been a quiet year for the industry.

Kentucky credit union second liquidation in 2022

On Sept. 30, the NCUA liquidated Paducah, Ky.-based Paducah Teachers FCU after the $12.1 million credit union posted the lowest net worth ratio in the country at the end of June at negative 5.24%, according to S&P Global Market Intelligence data.

Paducah Teachers was one of only two credit unions to be categorized as "critically undercapitalized" at the end of the second quarter. The other credit union, Rockville Centre, N.Y.-based MSBA Employees FCU, merged into Brooklyn-based Consumers FCU on June 30.

Following Paducah Teachers FCU's liquidation, C-Plant FCU, also based in Paducah, purchased some of the credit union's assets and assumed most of the company's share accounts, according to the NCUA.

Two West Virginia credit unions placed into conservatorship Oct. 7

A week later, on Oct. 7, the NCUA placed both Logan, W.Va.-based O.F. Toalston FCU and Williamson, W.Va.-based Mingo County Education FCU into conservatorship due to "unsafe and unsound practices" at both institutions. Both credit unions reported net worth ratios above 15% as of June 30, well in excess of the "well capitalized" threshold.

While some credit unions have successfully exited conservatorship — both Valdosta, Ga.-based Southern Pine CU and New York-based Municipal CU were returned to members this year after entering conservatorship in 2020 and 2019, respectively — others, like New York-based Empire Financial FCU were later liquidated.

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Undercapitalized credit unions

At the end of June, 43 credit unions reported a net worth ratio below 6.00%, making them "undercapitalized" or worse according to NCUA definitions. Seven of those credit unions have already merged into another credit union.

Among the 36 active credit unions, 10 are headquartered in New York, more than any other state, followed by Missouri at five.

SNL Image* Net worth calculations for a credit union can be found on an institution's company page in the left-hand menu's "Financials" section under Credit Union (5300) "Prompt Corrective Action Info (PCA) (Schedule G)".
* Click here for aggregate financial information for U.S. credit unions.

Buffalo, N.Y.-based St. Johns Buffalo FCU posted the lowest net worth ratio in the country as of June 30 among currently active credit unions at 3.55%, down from 3.88% at March 31 and 5.51% at June 30, 2021. This made it the only active credit union categorized as "significantly undercapitalized" as of June 30.

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