A new study reveals the pace of credit unions failures and closures has gone down since the beginning of 2014, and the report's author says it's a sign of a healthier CU industry.

The report, released by SNL Financial, found that only two CUs were closed or failed during the first quarter of 2015, compared to five during the final quarter of last year and eight during Q1 2014. Twenty-two CUs failed or were closed in 2014—compared with 19 in 2013, 22 and 2012 and 32 in 2011—but the study does not take mergers into account.

"I think it overall points to a healthier credit union industry," said Chris Vanderpool, the SNL Financial analyst who authored the study. "If you look at the number of failures in 2011 and compare them to 2014 and going into 2015, there's a contrast. I think it's safe to say that it's not just a fluke. That this is an overall trend downward."

Vanderpool noted that plenty of credit unions are merging into healthier institutions as a result of poor performance. "There's just no way around that," he said. But he was quick to point out that many of the CUs profiled in the SNL study are tied to sponsor groups that have shrunk considerably or completely dissolved in the last few decades.

"Thirty or 40 years ago it might have made sense to form a credit union around a certain type of industrial worker in a big city, [but] over time your member base shrinks and you're forced to close your doors."

He added that some of this trend can be attributed to an improving economy and credit unions doing a better job of managing their business, but also posited that the downward trend may be due in part to some of the worst of the worst performing credit unions being weeded out.

Vanderpool was not comfortable commenting on how much credit regulators should take for the good news, but said "I'm certain that NCUA plays a role at some point."

In a statement to Credit Union Journal, NCUA Chairman Debbie Matz credited the reduction to four factors—better safety and soundness measures by NCUA and state regulators, prudent policies in place at the credit union board level, improved management, and an improving economy.

"This is our shared success story," Matz said. "However, as safety and soundness failures are reduced, a higher percentage of failures are due to fraud."

Matz added, without elaborating, that NCUA plans to use the second quarter of 2015 to introduce new supervisory procedures to detect fraud earlier, but also credited boards and supervisory committees for the roles they play in fraud prevention.

CUNA also hailed the SNL study as a sign of good things to come.

"This is further good news that credit unions have recovered from the Great Recession and its aftermath," CUNA Chief Economist and Chief Policy Officer Bill Hampel said in a statement to Credit Union Journal. "Although we will continue to see voluntary mergers as credit unions seek to expand service to their members, we expect very few closures or failures in the coming years."

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