The total of uninsured shares/deposits reported by U.S. credit unions was cut by $7 billion during the 12 months ending June 30, 2023.

However, at $158 billion, uninsured credit union deposits remain quite high. What's more, $630 million of that is at credit unions that are less than “Well-Capitalized” by regulatory  standards

Each of the 49 credit unions listed in this week's Jumbo Rate News is less than “Well-Capitalized” and  also has more than $200,000 in uninsured shares/deposits. In some instances, much, much, more.

Subpar Credit Unions with Uninsured Deposits

Last year at this time (JRN 39:41), we reported that, “nearly three quarters of all federally-insured credit unions have at least some amount of shares/deposits that exceed the federal deposit insurance limit (which is typically $250,000)”. That statement is still true today.

However, the total of uninsured shares reported by these credit unions was cut by $7 billion during the 12 months ending June 30, 2023 (from $165 billion to $158 billion). That amount is still quite high, but there’s progress. A year ago, over $1 billion of those uninsured shares were in credit unions deemed less than “Well-Capitalized” by regulatory  prompt corrective action (PCA) standards. Today, that figure is  down to $630 million.

Each of the 49 credit unions listed on page 5 is less than “Well-Capitalized” by regulatory  standards, and  each has at least $200,000 in uninsured shares/deposits. Note the improvement. Last year we listed 50 federally-insured credit unions that were less that “well capitalized” and had more than $2 million uninsured each.

None of the credit unions on this week’s list are critically-undercapitalized. In fact, most are “Adequately Capitalized” by those same PCA standards.

Just one, Zero-Star Concord FCU, Brooklyn, NY, is listed as “Significantly Undercapitalized”. Although, a sneak peek at its third quarter call report leads us to believe that Concord FCU will be back up to “Adequately Capitalized” when that data is released.

Today we will examine three credit unions that were not on the list last year and three that were. Let’s start with the new additions:

1-Star Cambridge Teachers F.C.U., Cambridge, MA has been under-capitalized for three consecutive quarters; it has been on Bauer’s Troubled and Problematic Credit Union Report for seven consecutive quarters—over twice as long.

A year ago, Cambridge Teachers F.C.U. had a 6% capital ratio, just enough to be categorized as “Adequately Capitalized” (by regulators). That was not the only reason it was not listed last year. While its uninsured deposits remain virtually unchanged from ($1.590 million at June 30, 2022 to $1.584 million today), our cutoff changed as members of other credit unions revamped their accounts.

Zero-Star Concord F.C.U., Brooklyn, NY had a much more precipitous drop—from 3-Stars and Well-Capitalized at year-end 2022 to Zero-Stars and Significantly Undercap-italized just one quarter later. With less than $10 million in assets and only 600 members, that $211,000 in uninsured shares/deposits is a significant amount. What’s more, Concord F.C.U. has lost 19% of its membership in the past year.

3-Star SkyOne F.C.U., Hawthorne, CA has over $105 million in uninsured shares/deposits. That is among the highest on this list. However, SkyOne has over 55,000 members, so those shares could be divided up into small amounts per member.

Up until June 2023 data, SkyOne was considered “Well-Capitalized” and is still “Adequately” Capitalized by both regulatory and Bauer standards. Unlike the previous two, SkyOne is posting profits, but it is wrestling with loan quality, as is Concord FCU.

As for the three repeats: The 4th largest credit union in Iowa, 3-Star Collins Community C.U., Cedar Rapids, IA has $1.6 billion in assets and keeps growing. Its uninsured shares/deposits, on the other hand, are slowly but surely going away. At June 30, 2022, total shares and deposits at Collins Community totaled $1.241 billion with nearly $220 million uninsured. Fast forward 12 months and total shares/deposits are $1.324 billion but  the uninsured portion has decreased to $121 million.

Another interesting thing we noticed about Collins CCU is that while assets, loans, shares and deposits are all climbing, membership is dropping. It lost over 8,000 members during the 12 month period.

3-Star Credit Union One, Ferndale, MI is another large credit union with assets totaling $1.756 billion, compared to $1.830 billion a year ago. In this case, total shares and deposits at the credit union have dropped by about $82 million. The uninsured portion only  accounts for about $14 million of the decline.

Like Collins CCU, membership at Credit Union One has decreased over the course of the year from almost 121,000 at June 30, 2022 to 116,474 at June 30, 2023. That’s a loss of 4,500 members or 3.7% of its membership.

3-Star Deseret First F.C.U., West Valley City, UT has increased its membership, assets, loans and shares/deposits in the 12 months noted. Its uninsured share/deposits are about the only thing that dropped—from $70.932 million last June to $60.984 million this June.

That’s a 14% drop in uninsured deposits. That, and all other indicators, including its capital ratio seem to be heading in the right direction for this credit union. We expect to see it at “Well Capitalized” with Sept. data.