As an industry, U.S. credit unions witnessed just a small increase (2 basis points) in both their delinquency and charge-off ratios during the 12 months ended March 31, 2025.

In this week's Jumbo Rate News, however, we examine several outliers, those with high nonperforming ratios as well as low reserves. Zero-Star Members First of Maryland FCU, Baltimore, MD, which failed on August 29, 2025, was not included on our page 5 list this week. While the loan portfolio at Members First of Maryland was far less than pristine, it was in much better shape than the 52 credit unions we listed.

Dwindling capital was what ultimately did in Members First of Maryland. The credit union lost more than half of its capital during the 12 months ended March 31, 2025.

Credit Unions See Loans Souring

Welcome back. We hope everyone had a nice long weekend. Bauer’s analysts never rest. We anticipate June 30th credit union data to be released soon. In the meantime, let’s address credit unions that are already struggling with loan quality.

Collectively, the credit union delinquency and charge-off ratios both went up by just 2 basis points during the 12 months ended March 31st. The 52 CUs found on page 5, however, were less fortunate.

As of March 31, 2025, each credit union listed on page 5 reported a nonperforming assets ratio greater than 3% as well as enough loan loss reserves to cover less than 60% of those nonperforming loans.

Additionally, all CUs on page 5: a) are federally-insured, b) have at least $1.5 million in assets, and c) are rated less than 4-Stars by Bauer.

We also mentioned one of these credit unions two weeks ago (JRN 42:31) because it still has Paycheck Protection Program (PPP) loans on its books. Zero-Star 1st Choice Credit Union, Atlanta, GA (67505) was “critically undercapitalized” at March 31st (and remains so with June 30th data). At this writing, 1st Choice is still an active credit union.

There are several other subpar credit unions on page 5 this week that we would like to shed a little more light on as well. One, 1-Star Tuskegee Federal C.U. (TFCU), Tuskegee, AL (2791) was established in 1938 to serve the people who live, work or own a business in either Tuskegee or Macon County, Alabama. By the end of 1938 TFCU had 124 members and had issued 37 loans for a total of $1,564. It proudly announced that only one loan was delinquent. It was for $5. J

Times have changed. At March 31, 2025, TFCU had 318 loans on its books totaling $6.564 million. Nineteen were 60 days or more in arrears representing $404,000. Of those 19 loans, 12 are unsecured.

As a result, TFCU’s Bauer’s adjusted capital ratio is barely positive at 0.56%. Its non-performing assets ratio exceeds 4% and its allowance is enough to cover just 28% of its delinquent loans. L

Scroll down the list to Zero-Star Symphony FCU, Boston, MA (18861), a small, $2 million asset, “well-capitalized”, credit union. Capital may be king, but it does not stand alone. There is much more to the financial picture of any financial institution than capital adequacy.

In this case, Symphony FCU has posted six consecutive quarterly losses and its nonperforming asset ratio is among the highest on page 5 (8.76%). What’s worse, in the event these loans go even more sour than they already are, there is only enough in reserves to cover 6½% of what is currently delinquent. With such a small institution carrying just 48 loans, one bad apple really can spoil the whole bunch.

Three other Zero-Star credit unions appear on page 5; all are undercapitalized by both regulatory standards and Bauer’s. They are:

Zero-Star Greater Nevada Credit Union, Carson City, NV (68228) was established in  January 1949 as Nevada State Employees FCU. It ended its first year with 82 members. Through continued organic growth as well as two acquisitions, by 1988 it was determined a new name was in order. That new name: Nevada Community Federal CU.

It was far from done growing. The 1990s brought two more acquisitions as well as a name and charter change. Nevada Community Federal Credit Union switched to a state charter and changed its name to become Greater Nevada CU. In the early 2000’s Greater Nevada CU continued to grow via two additional credit union acquisitions.

During the pandemic and immediate aftermath, Greater Nevada CU was in pretty good shape. It was not until 2022 that cracks began to show. Its nonperforming asset ratio jumped to 2.73% in the first quarter of ’22, and bounced a bit in the quarters that followed. By the second quarter 2023, that nonperforming ratio was climbing while its capital ratio was falling. Both are now in the 5% range. High for one and low for the other.

Zero-Star Bykota Federal C.U., Brooklyn, NY (20419) is less than one-tenth the size of Greater Nevada CU. Yet, it is experiencing similar issues with loan quality. Based on March 31, 2025 data, Bykota FCU’s regulatory capital ratio of 5.2% and its nonperforming assets ratio of 5.0% are almost identical to Greater Nevada’s. A sneak peek at June numbers indicates the nonperformers at Bykota are soaring even higher.

Another, Zero-Star Star City Federal CU, Roanoke, VA (22560) has already found an acquirer. In May 2025, 5-Star Pen Air Credit Union, Pensacola, FL (68734) acquired the struggling institution.

This marks Pen Air CU’s second ever acquisition, and it gives it 3,300 potential new members from Elbit America Inc. Until now, Pen Air’s footprint covered 19 counties in Northwest Florida and Southeast Alabama.

Whether Pen Air expands its physical footprint or will service Elbit America employees via electronic channels is unclear at the moment. What is clear is that Pen Air was a good choice; it has been rated 5-Stars for 34 years straight!

We expect to have new credit union star-ratings and reports available soon.