Weiss Ratings: Only 10% of Credit Unions are Strong

Jupiter, Florida (July 20, 2011) – Credit unions do not automatically provide a safe haven from the weakened U.S. banking system. According to the most recent study by Weiss Ratings, only 736, or 10%, of U.S. credit unions were found to be strong. The nation’s leading independent provider of bank, credit union and insurance company ratings considers the strongest institutions those earning a financial strength rating of B+ or better.

In contrast, 2,376, or 32.1%, of the nation’s 7,391 credit unions are considered weak. And only 372 credit unions received Weiss’ highest “A” ratings.

Weiss Ratings reviews credit union financial data each quarter. The financial strength ratings are based on the most current financial data effective March 31, 2011.

According to Gene Kirsch, bank analyst for Weiss, “Many of the nation’s credit unions are feeling the effects of the slow economic recovery, combined with the continuing fallout from subprime lending and the nation’s weak housing market.”

Overall, the nation’s credit unions increased profits by $658 million to $1.7 billion despite a $6.1 billion decline in lending in the first quarter, compared to the same period last year. Deposits grew, year-over-year, by almost 5% to $822.7 billion. Industry liquidity—short-term assets as a percentage of short-term liabilities—increased from 10.4% at March 31, 2010 to 22.2% at March 31, 2011, an indication that the industry may be better equipped to weather economic downturns.

“The decrease in lending is likely a result of high unemployment in many communities combined with more stringent lending requirements,” added Kirsch.

Consumers can search for credit union ratings in their area for free at www.weissratings.com.
While most credit unions are federally insured by the National Credit Union Administration, Weiss cautions that worldwide economic instability combined with the state of the U.S. economic recovery and debt problem make it even more important to know the health of financial institutions.

Weiss Ratings’ complete lists of strongest and weakest credit unions are available at
http://weissratings.com/creditunionlists.  

 

About Weiss Ratings, LLC

Weiss Ratings is the nation’s leading independent provider of bank, credit union and insurance company financial strength ratings and sovereign debt ratings. Weiss accepts no payment or other compensation for its ratings from rated institutions. WeissRatings.com is a destination site to help consumers and professionals make informed financial decisions.

 

For more information contact:

Maryellen Murphy
mmurphy@weissinc.com
(561) 818-8885