Tangibility, Risk, Resilience, and Growth in U.S. Credit Unions: Evidence from Planned and Shock-Driven Non-Loan Assets
Keywords
credit unions, tangibility, land and buildings, fixed assets, foreclosed assets, risk, growthAbstract
This study examines how tangible non-loan assets relate to risk, balance sheet resilience, and growth in U.S. credit unions. Using NCUA call report data, the analysis measures total tangibility and decomposes it into planned tangibility, captured by premises and other fixed assets, and shock-driven tangibility, captured by foreclosed and repossessed assets obtained through workout and recovery. This decomposition separates slower moving operating investment from distress-related collateral holdings that become embedded on the non-loan side of the balance sheet. In fixed-effects panel regressions with lagged explanatory variables, controls, and high-dimensional fixed effects, higher tangibility is associated with thinner capital buffers and weaker economic solvency, alongside higher delinquency and net charge-offs, with materially stronger associations for the shock-driven component. These links intensify in crisis periods and vary with institutional scale and capital buffers, with the adverse associations generally stronger during stress periods and weaker at larger and better-capitalized credit unions. Moreover, planned tangibility is positively related to loan and member growth, but negatively related to asset growth, while shock-driven tangibility is strongly negative across growth outcomes. Overall, the evidence suggests that non-loan asset composition provides incremental information about both strategic capacity and distress dynamics and the trade-off between growth and resilience in a sector where retained earnings are central to resilience.
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