Jerome Powell may be the grinch trying to steal Christmas this year with the help of the Fed’s Open Market Committee. They raised borrowing costs another ½ point this week, making those credit card bills just a little more difficult to pay off.
But we won’t let that spoil our day… especially since that means CD rates will continue to climb as well. Note that the top CD rates (above) are highest at the 1 year mark. We now have two banks offering a one-year Jumbo CD at 5% or higher. At 18-months, rates start to decline. This indicates that bankers believe rates will not stay this high for long… so, grab them while you can.
Jumbo Rate News will not be published next week, so this is it for 2022 (except for the blog). If you haven't signed up already, go to bauerfinancial.com to make sure you get notified of new blog posts.
When we return, we will have a new format celebrating
Bauer’s 40th Anniversary!
In case you can’t tell, we’re pretty excited about it. But that’s next year. Until then, Happy Holidays and have a Safe and Happy New Year!
Third quarter credit union data has been analyzed and is updated on our website now. Similar to banks, the percent of recommended institutions (rated 5-Stars or 4-Stars) is virtually unchanged from last quarter.
Unlike banks, however, three credit unions failed in the third quarter. One, O.F. Toalston FCU, Logan, WV, had less than $500,000 in assets and was, therefore, too small to rate. (Credit unions must have assets of at least $1.5 million to be rated by Bauer.) Then, Mingo Cnty Education FCU, Williamson, WV, which had been operating under conservator-ship since October 7th failed just a month later, on November 15th.
The third, Paducah Teachers FCU, KY, dropped to Zero-Stars based on first quarter financial data. By the end of the second quarter, it was “critically under-capitalized” and was ultimately closed on September 30th. We were able to see its third quarter call report, though. (Needless to say, it was bad.)
Paducah Teachers was one of three “Critically Undercapitalized” credit unions at September 30th. The other two are: Zero-Star St. Johns Buffalo FCU, Buffalo, NY and
First Miami University Student FCU, Oxford, OH, which, with just $269,000 in total assets, is too small to be rated by Bauer.
In total, 41 credit unions are considered less than “Adequately Capitalized” by Regulatory (PCA) standards. You can find them all, as well as all others rated 2-Stars or below on Bauer’s Troubled and Problematic Credit Union Report.
But, ’tis the season for good news. Total assets at federally-insured credit unions grew by 6.6% over the year while net worth grew by 10.3%. The industry capital ratio now stands at 10.59%. That’s up from 10.42% at mid-year and 10.23% a year ago.
Total loans outstanding at credit unions increased 19.2% over the year with gains reported in most major categories. Shares and deposits also rose—by 6.3% over the year. Gains in deposits were also reported in most categories. One thing we find interesting, is the source of much of this deposit growth is in nonmember commercial accounts.
While commercial loans represent only about 9% of total loans, that percent is growing. And quickly. Commercial loans grew by 25% during the 12-months ending September 30th.
The same is true for commercial deposits. Since September 30, 2019, (BC; Before Covid) commercial deposits in credit unions have more than doubled. Nonmember deposits (including commercial deposits) increased 67% in the past 12 months alone.
Keep that in mind when you look at page 7. The 53 federally-insured credit unions listed reported more year-over-year share (deposit) growth at September 30, 2022 than any other “established” credit unions (we eliminated newer institutions, those established in 2014 or later). In many instances, that increase can be attributed to nonmember deposits.
5-Star Heartland Credit Union, Madison, WI, for example, reported commercial deposit accounts of $37.325 million at 9/30/2021. One year later and that amount is up to $60.141 million. 5-Star Sunlight Credit Union, Cody, WY grew its commercial deposits even more—from $6.555 million to $31.106 million. Sunlight has a low-income designation, which gives it more leeway in deposit gathering. That is not the case for Heartland or several others on the list.
5-Star Bridgeway FCU, AL and 4-Star LOC Credit Union, MI were both involved in mergers, sending their numbers soaring.