Dennis Holthaus Expert Column on Use of Sub-Debt

Skyway Managing Director Dennis Holthaus shared his views on subordinated debt with the Credit Union Times.


The use of subordinated debt for supplementing a credit union’s regulatory capital ratio has been available to Low Income Credit Unions (LICUs) since the 1990s but was used lightly in the early years. At first, there was a general lack of understanding about sub-debt. It was only available to LICUs, capital levels were healthy enough without it, and it lacked regulatory emphasis or structure. However, the NCUA has more recently become more supportive of its use for capital management purposes as regulatory capital requirements have evolved in part due to credit unions coming under more capital pressure from the level of growth the industry has experienced.

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