Secondary Capital - What Have We Learned?

Secondary Capital is the topic of conversation at many a low income designated credit union (LICU). As loan demand continues to outpace retained earnings, credit unions have to be creative to continue to serve their respective fields of membership. Smaller credit unions may find themselves in an even more precarious situation, as they have fewer options when pressure is applied to net worth.

Against this backdrop, Olden Lane can offer a few observations about the current state of things related to secondary capital. We made a FOIA request of the NCUA in late 2018 to better understand the metrics around secondary capital applications. In search of information that could benefit our clients in their efforts to secure approvals in a timely and pragmatic manner, the request focused on the following:

How many applications had been submitted?How many applications had been approved? What was the size of the applications being approved versus denied?

According to the NCUA response, about half of all applications are approved. The average amount of secondary capital requested in a denied application was approximately $12.5M. The median amount of an application denial was approximately $10M. The average amount of capital requested in approved application was approximately $2.5M

These results only convince us further of what we’ve been telling clients and prospective clients for some time: when it comes to secondary capital, bigger is not better. 

Our experience and our conversations tell us that a thoughtful and responsible approach to secondary capital as a growth tool is likely to be approved. And, a strategy utilizing third party assets, employing excessive leverage or heavily reliant on wholesale funding is likely to be denied. Your application has to make sense given your strategic plan and the needs of your field of membership. 

Regardless of the size of your credit union or the size of your request, we would love the opportunity to help. Please feel free to reach out with questions or for more information. We can be reached at


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