-

KBRA Releases Research – Credit Union Sector Overview

NEW YORK--(BUSINESS WIRE)--KBRA releases a report that provides an overview of the credit union (CU) industry, examining the evolution, complexity, and nuances within the segmented not-for-profit financial sector. The report summarizes the emerging industry profile while benchmarking them to the broader KBRA-rated universe, analyzes the balance sheet composition and the associated risks, and clarifies the challenges of earning expectations combined with the pressures surrounding incremental funding costs fueled by the earning asset growth. The report also highlights acquisitions activity that has been a larger focus for CUs in recent years.

Key Takeaways

  • The consumer-oriented CU financial model for the larger CUs has a diverse field of membership and geographic focus coupled with financial performance generally consistent with investment-grade metrics.
  • The National Credit Union Administration (NCUA) has evolved its regulatory framework for CUs to be more consistent with that of the U.S. banking industry.
  • The historical failure rates for the CU industry are quite low and negligible for CUs with total assets greater than $1 billion.
  • The credit profiles of CUs generally benefit from sizable levels of stable funding from insured deposits. Significant CU balance sheet growth in 1-4 family and auto loans over the last three years has reduced their liquidity positions, and the 1-4 family fixed product has added interest rate risk in the rising rate environment.
  • Compared to shareholders of typical corporations and banks, members (or “owners”) of CUs are motivated primarily by advantageous services pricing rather than profit maximization.

Click here to view the report.

Related Publications

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

Contacts

Brian Ropp, Managing Director
+1 (301) 969-3244
brian.ropp@kbra.com

Ben Rodriguez, Director
+1 (301) 969-3186
ben.rodriguez@kbra.com

Anna Jezerski, Analyst
+1 (301) 960-7047
anna.jezerski@kbra.com

Joe Scott, Senior Managing Director
+1 (646) 731-2438
joe.scott@kbra.com

Business Development Contact

Justin Fuller, Senior Director
+1 (646) 731-1250
justin.fuller@kbra.com

KBRA

Details
Headquarters: New York City, New York
CEO: Jim Nadler
Employees: 400+
Organization: PRI

Release Versions

Contacts

Brian Ropp, Managing Director
+1 (301) 969-3244
brian.ropp@kbra.com

Ben Rodriguez, Director
+1 (301) 969-3186
ben.rodriguez@kbra.com

Anna Jezerski, Analyst
+1 (301) 960-7047
anna.jezerski@kbra.com

Joe Scott, Senior Managing Director
+1 (646) 731-2438
joe.scott@kbra.com

Business Development Contact

Justin Fuller, Senior Director
+1 (646) 731-1250
justin.fuller@kbra.com

More News From KBRA

KBRA Releases Research – The Geography of Auto Loan ABS Performance

NEW YORK--(BUSINESS WIRE)--KBRA releases research examining state-level auto loan ABS performance across the U.S. Most auto ABS transactions are geographically diversified, limiting the impact of any single state on overall deal performance. However, geographic differences may be more relevant for whole-loan buyers and for securitizations with outsized concentrations in states performing meaningfully above or below expectations, particularly when those concentrations differ from a shelf’s histo...

KBRA Assigns Preliminary Ratings to PRKCM 2026-AFC6 Trust

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to 10 classes of mortgage-backed notes issued by PRKCM 2026-AFC6 Trust, a $327.8 million non-prime RMBS transaction. The underlying collateral consists of 793 residential mortgages, with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) representing 98.4% and 1.6% of the pool, respectively. The transaction includes a meaningful concentration of collateral that KBRA considers non-prime. All of the loans were origin...

KBRA Assigns Preliminary Ratings to Reach ABS Trust 2026-3

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to five classes of notes issued by Reach ABS Trust 2026-3 (“Reach 2026-3”), an unsecured consumer loan ABS transaction. Credit enhancement consists of overcollateralization, subordination of junior note classes (except for the Class E notes), a cash reserve account funded at closing, and excess spread. This transaction represents Reach Financial, LLC’s (“Reach”, the “Servicer” or the “Company”) third term ABS securitization in 2026 and...
Back to Newsroom