Every bank. Every credit union.
One mid-year checkup.

The system is sound. That was never the question.

Banks earned a record $80.5 billion in the first quarter — a 1.26% return on assets, up 14% from a year ago. Credit union net income ran 30% ahead of last year. The median credit union holds a net worth ratio of 12.4%, nearly double its regulatory well-capitalized threshold, and the median bank holds a Tier 1 leverage ratio near 11%. By every headline aggregate, mid-2026 finds American depositories in strong condition.

But aggregates are written by the biggest balance sheets, and averages are where trouble hides. The Calibra composite scores every institution against its true peers on the five CAMEL-style dimensions — capital, asset quality, management efficiency, earnings, and liquidity — on a 1-to-5 scale, where 1 is the strongest. Here is the whole industry on one page.

Records at the top. Movement in the tails.

In the four quarters through March, 258 banks and 209 credit unions — 467 institutions — saw their problem-loan ratio cross above 2%. That is roughly one in eighteen U.S. depositories crossing a threshold that, in our experience sitting in the CFO chair, is where board conversations change tone.

The median bank's noncurrent-loan ratio has risen every quarter for the past year, from 0.38% to 0.46% — a 21% climb that record earnings have so far paid for without strain. Credit union delinquency sits higher, at 0.63%, though its first-quarter dip is the familiar tax-refund seasonal; year over year, both lines point up.

632 credit unions — one in seven — ran negative earnings in the first quarter. Among banks: one in twenty-two.

Below $100 million, it is a different industry.

Deterioration is not spread evenly — it is stacked at the small end, with a gradient steep enough to read as two separate industries. Among credit unions under $10 million in assets, 31% saw delinquency jump more than half a point in the past year, and half saw earnings fall materially. Above $1 billion, those shares drop to single digits. Banks show the same staircase.

The mechanics are familiar to anyone who has run a small balance sheet: concentrated fields of membership, thinner fee income, no room to absorb a single large charge-off, and compliance costs that do not scale down. What is new in 2026 is the pace — the small-institution tail is moving faster than at any point in our nine-quarter window.

Consolidation is doing the quiet work.

A federally insured credit union has disappeared roughly every other day for two years — 357 charters since the first quarter of 2024, taking the count from 4,572 to 4,250. This is usually reported as a count. It is more informative as a selection effect.

The industry's improving averages are, in part, the arithmetic of its weakest members leaving the sample. Most exits are voluntary mergers arranged before condition becomes distress — the system working as designed. But it means headline health statistics flatter the trend, and it means the merger pipeline is where small-institution stress actually shows up first. Banks are consolidating at a similar pace — 304 charters gone over the same two years — but with a far weaker selection signature: exiting banks scored only about five points below the industry, versus twelve for credit unions.

Banks and credit unions are trading places.

The two halves of the depository system are moving through 2026 on opposite tracks. Banks are out-earning the turn in their credit quality: the median community bank's margin expanded from 3.29% to 3.53% over five quarters and median ROA reached 1.19% — even as its noncurrent ratio climbed every quarter. Credit unions are the mirror image: delinquency is stabilizing, liquidity is at a nine-quarter high — and earnings have fallen for two straight quarters, squeezed by deposit pricing and the member-rate mission that is the whole point of the charter.

One nuance the aggregates miss: the FDIC's industry-wide margin fell 8 basis points in Q1 while the median bank's margin rose. Margin compression in 2026 is a big-bank phenomenon; on Main Street, spreads are still widening.

57 credit unions. 22 banks. Watch the flow, not the stock.

Peer-relative scores answer "how do I compare?" — they cannot answer "is the industry drifting?", because someone must always be in the bottom quartile. So the Calibra Watch List applies fixed prudential benchmarks — anchored to regulatory capital categories and long-run norms for delinquency, charge-offs, earnings, and liquidity — that do not move with the crowd. An institution lands on the watch level only when its own fundamentals do.

The census is small and, for now, shrinking — in both sectors, more institutions left the watch level in Q1 than entered it, helped by the seasonal delinquency dip. The undertow is broader, though: 797 credit unions (18.9%) and 473 banks (11.2%) saw their composite fall meaningfully over the past year. The flow statistic is the one to hold us to: we will publish it every quarter, same method, same thresholds.

Where it concentrates: by state, the weakest median credit union scores sit in Washington D.C., New Jersey, Oregon and Washington; the sharpest one-year deterioration ran through D.C., Kentucky and Georgia. On the bank side, Massachusetts, New Hampshire, Washington and Maine carry the highest shares of institutions in the bottom two bands — half of Massachusetts' banks score Marginal or Weak against peers.