Freedom Northwest Credit Union Update

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UPDATE #2 3/5/2020: The credit union has stopped offering new CDs for now. I just received confirmation from a CSR. When the credit union released the new rate sheet earlier today, I assumed the CDs would at least last for a few more days. For future updates on this credit union, please refer to the comments below. Thank you to all DA readers who have been sharing their experience with this credit union in the comments.

UPDATE 3/5/2020: New 60-month Share Certificates are no longer being opened. However, shorter-term CDs are still available with very competitive rates. There were only small rate cuts on the 12-month (2.30% APY) and 36-month (2.70% APY).

Deal Summary: Share Certificates, 12-month (2.45% 2.30% APY), 24-month (2.55% APY), 36-month (2.80% 2.70% APY), 48-month (2.85% APY), and 60-month (3.20% APY), $1k minimum.

Availability: Easy membership requirement.

I’m starting this blog post about Freedom Northwest Credit Union (FNWCU) with a review by DA reader, Rich89044.

Was attracted to their 3.2% 5-year CD offering. Called to see if I was eligible to be a member and what it would take to become a member an open an account with them.

With their help, I was able to become a member, wire them the funds, and get my CD opened all in the same day - something I've never been able to accomplish in the past!!

That being said, here are the very competitive Share Certificate rates currently offered by Freedom Northwest. Given how competitive these rates are, the small size of the credit union and the new month that’s almost underway, I don’t think these rates will last long.

All the Share Certificates are also available as IRA Certificates (Traditional and Roth), earning the same APYs with the same funding requirements.

According to CSR and the CD disclosure, partial withdrawals are allowed and the Early Withdrawal Penalties are as follows:

  • 90 days interest – terms less then 12 months
  • 180 days interest – terms between 12-24 months
  • 365 days interest – terms greater than 24 months

Funding a Share Certificate can be done by wire, transfer from an external bank, or by mailing a check. Maturing funds can be distributed by cashier’s check, wire transfer, or transferred into another Freedom Northwest account.

Many thanks to Rich89044 for his review of Freedom Northwest Credit Union!

Availability

Headquartered in Kamiah, Idaho, Freedom Northwest Credit Union’s field of membership (FOM) provides a way to join for almost all US citizens/resident aliens.

You won’t find the FOM detailed anywhere on FNWCU’s website. Matter of fact, the Join Us page doesn’t mention any specific requirements for membership. All the following information comes from three separate conversations with three different CSRs.

The first question all the CSRs asked me was, “Do you have a relative who belongs to Freedom Northwest?” Anyone related to a current Freedom Northwest member is eligible to join.

The rest of us can join FNWCU with a one-time $10 membership fee and a $20 contribution “that goes to support the local Idaho community.” It’s as simple as that.

Joining FNWCU and/or opening a Share Certificate can be done by phone (866.687.5228) or at either of two Idaho branches located in Kamiah and Kooskia.

While there is no online application, the Join Us page states,

You can also email us ([email protected])
with inquiries about basic member services.

Unfortunately, FNWCU does not participate in the CO-OP Share Branch or ATM networks, but is a member of the AllPoint® ATM network.

Credit Union Overview

Freedom Northwest Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 5.91% (excellent), based on September 30, 2019 data. In the past year, FNWCU has increased its total non-brokered deposits by $20.38 million, an excellent annual growth rate of 20.18%. Please refer to our financial overview of Freedom Northwest Credit Union (NCUA Charter # 65722) for more details.

Founded in 1963 as the Kamiah Community Credit Union, the Freedom Northwest Credit Union re-brand occurred in 2016. (Kamiah is the Nez Pierce word for “many rope litter.” The Nez Pierce tribe made kamiah ropes with which to fish for steelhead.) FNWCU is currently the eleventh largest credit union in Idaho, with more than 8,400 members and assets in excess of $186 million. According to FNWCU’s Our History page,

We have grown our capital at a rate far above our peers, resulting
in our capital position increasing seven-fold over the last 15 years.

How the Share Certificates Compare

When compared to the similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide and require a similar minimum deposit, all of Freedom Northwest Credit Union's Share Certificate APYs currently rank first.

The above rates are accurate as of 2/29/2020.

Searching for the best CD rates, both nationwide and in your state? Please refer to our CD Rates table.

Related Pages: Spokane CD rates, 1-year CD rates, 5-year CD rates, nationwide deals

Comments
gregk
  |     |   Comment #1
They will get deluged. Good luck FNCU.
zz
  |     |   Comment #2
I just called, they answered on the 8th ring and quickly setup the primary saving account, and 2 CD's. Funding could be a wire the same day, an ACH the next day or sending in a check. SSN and Drivers license number are taken over the phone and they email you a docusign to fill out. Incredibly easy.
alan1
  |     |   Comment #3
thank you, zz
My experience is similar to yours, though not identical. I'm sorry to hear that it took them eight rings to answer the phone; my call was answered on the first ring. Perhaps you got caught in the "deluge." I spoke with a representative who transferred me to someone who could process my request. I was on hold for perhaps one minute, waiting to speak with that person. I was not required to furnish drivers license and social security number over the phone.

I received a form by e-mail to complete and submit to the credit union.
Many thanks to Rich89044 for describing the process in a review, and to Ken Tumin and depositaccounts.com for the article on this deal.

And beware of Nostradumus types, who simply know that Freedom Northwest "will get deluged." Maybe they will; maybe they won't. But it was impossible to know such a thing on March 1, 2020. I was pleasantly surprised by how quickly everything went, but, then again, what do I know?
deskandchairs
  |     |   Comment #4
Generally my experience as well (although they want me to send them a copy of the DL).
Additionally, they do NOT require a hard credit pull (as so many Credit Unions do) in order to become a member, unless there is a problem with the ChekX (sp?) report.
While I have not yet received the ACH authorization form they are sending by email, my initial impression is that this outfit has their act together.
zz
  |     |   Comment #5
I was actually happy to have it picked up on the 8th ring and talk directly to the representative. It's interesting that for 3 people doing the same thing they had 3 different methods (or more) to handle it. In all cases it was quick so certainly no complaints.
RZ
  |     |   Comment #6
I also had a very pleasant experience as my call was answered on the first ring and directed to someone who set up my account over the phone and via Docusign.

CD rates are still as posted until tomorrow at which time they will drop. I was given a lock in provided the the funds are delivered no later than Friday.
blazer9
  |     |   Comment #7
Time zone gives some a chance
if you can get same service as others
RZ
  |     |   Comment #8
Surprised that this has not drawn more interest considering the nation leading rates
JoeMoney2020
  |     |   Comment #9
Is this insured? This is a state-charted (not a *federal*) credit union.
alan1
  |     |   Comment #10
Accounts at Freedom Northwest Federal Credit Union are insured by the National Credit Union Administration (NCUA). Freedom Northwest is a federally insured, state-chartered, credit union ("FISCU")
According to the NCUA website, its charter number is 65722.
https://mapping.ncua.gov/SingleResult.aspx?ID=65722&IsCorpCU=0
JoeMoney2020
  |     |   Comment #11
I reviewed their financials. They list "NCUSIF Premium Expense" as a line item, but the amounts are zero or "N/A" for all of the four most recent quarters. My understanding is that credit unions pay a premium based on their assets to fund the NCUA coverage pool (vs. FDIC insurance, which is funded by the taxpayers).
I've asked the CSR but she wasn't able to give me any details.
alan1
  |     |   Comment #12
I believe you are misinformed re deposit insurance. You wrote that FDIC insurance "is funded by the taxpayers", but according to the FDIC:
"The FDIC receives no Congressional appropriations - it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities."
https://www.fdic.gov/about/learn/symbol/index.html

As to the "NCUSIF Premium Expense" [a highly technical "term of art"], there are years where there is there is no (zero) "NCUSIF Premium Expense". See, e.g. https://nafcucomplianceblog.typepad.com/nafcu_weblog/2016/12/ringing-in-the-new-year-with-a-2017-ncusif-premium-charge.html

I haven't looked at recent reports, but I have no reason to doubt the correctness of Northwest Freedom's listing of its ""NCUSIF Premium Expense", and no reason to be concerned about it, and no reason to question the NCUA's website listing of Freedom Northwest as a federally insured credit union.

And I would doubt that there are very many telephone representatives at credit unions who are in a position to discuss line items on a financial institution's financial statements.
RZ
  |     |   Comment #14
Setting up and funding the CD was by far the easiest and most pleasant encounter that I have yet to experience with an out of state FI. Makes me wonder why other banks and CUs at times make this process so tedious.
alan1
  |     |   Comment #15
As of 7:35 PM Pacific Time (Idaho is in two time zones and the credit union is on PST), Freedom Northwest Credit Union seems to have taken down its CD rate sheet. I could not find any information about CD rates on the credit union's website. Perhaps they are in the process of replacing the old rate sheet with a new one.
https://www.fnwcu.org/bank/deposit-rates/
ConfedrcyDunces
  |     |   Comment #16
Greg was right, you were wrong to mock him.
gregk
  |     |   Comment #32
Aw, getting "mocked" by alan1 here is a privilege. But I was right, yes.
Jim452
  |     |   Comment #18
Must be taking them down, CSR informed me yesterday that the CEO closed down the 3.20% 5 year as of COB yesterday.
niniss
  |     |   Comment #19
Yep, can't find anywhere. Guess I'm one step behind again. You snooze you lose.
cropcircles
  |     |   Comment #17
I tried to open an account yesterday afternoon Eastern. I hope I made it under the deadline.

Even if I don't get the account - I have to give them a good review. The customer rep I dealt with was pleasant , provided clear instructions, and followed up with me.

So many smaller banks and CUs I have dealt with over the years (in the Mid, South and East US) have grown to the point where I am just a number to them. No local people answering their phone and the service deteriorates.

All the best to FNCU.
alan1
  |     |   Comment #20
Thanks for posting re your experience, cropcircles. I agree -- they're amazing (at least so far). Based on my experience, and all of the comments, Freedom Northwest had no problem handling whatever calls they received. Larger credit unions (including some good ones) have often been unable to handle the volume of calls that come in when they offer a great deal. They're just flooded and are overwhelmed. And yet this very small institution seems to have answered all telephone calls promptly; no extended hold periods; no dropped calls. Of course, I don't know how many people actually called them. (I'm surprised that there was so little discussion of the deal on this website.) And the process for joining the credit union, etc. was quick and simple.

Now as to the future of Freedom Northwest, I have some concerns as to whether they'll still be around by the maturity date. I don't have time to dig up the citations, and I apologize for that -- I'll just summarize what I found. Their business is based on nonconforming mortgages. And, as best I can tell (and I'm not certain of this part), they seem to be betting the farm on nonconforming mortgages -- they're going all in. If they know what they're doing, and that market doesn't go south, and they have a bit of luck, things could wind up fine.

As to why they offer such high yields, it _might_ have something to do with the NCUA having given a "thumbs down" to a proposed scheme for Northwest Freedom to gain access to funds by other means. But it's definitely possible that this offer was not related to the NCUA's having rejected their scheme -- I think that occurred about one year ago.

Anyway, I hope they stay in business, both because I like 3.20% and because I hope that the employees there keep their jobs.

And again, apologies for not providing sources for my factual assertions, and for my opinions, re Freedom Northwest's business. I generally try to provide sources. citations and links,, but I'm pressed for time today.
Hooked
  |     |   Comment #22
alan1 - It’s a joy to read this. Thank you for your time.
dsFNWCU
  |     |   Comment #24
Hi alan1,

Please email me at [email protected]
I'd like to get you in touch with our CEO, he can explain our real estate loan niche. I can assure you he can provide some very comforting details about our financials, balance sheet, etc. :)
#28 - This comment has been removed for violating our comment policy.
lou
  |     |   Comment #51
What's wrong with non-conforming mortgages?
alan1
  |     |   Comment #21
NEW CD APYs POSTED AT FREEDOM NORTHWEST -- My take: don't give up on this credit union --  I think their yields for all terms of 12 months or more are leaders.

3 month 0.65%
6 month 1.55%
9 month 1.55%
12 months 2.30%
24 months 2.55%
36 months 2.70%
48 months 2.85%
"We are not currently opening new 60 month CDs."
The rollover yield for existing 60 month CDs is 3.10%
https://www.fnwcu.org/wpcms/wp-content/uploads/2020/03/CD_Deposit_Rates_3.5.2020.pdf
TJ
  |     |   Comment #23
As of today 3/6, the website says they are no longer accepting new 60 month CDs, and rates hare gone down little
cdguy
  |     |   Comment #25
It was a great rate, but I was also worried about their non-conforming mortgage strategy
alan1
  |     |   Comment #27
I just want to let people know that I contacted the credit union in response to comment #24 and spoke with Freedom Northwest's CEO. I have the CEO's permission to post about our conversation, and will do so tonight or tomorrow.
For now, I just want to reiterate what I and others have previously posted -- the customer service of this credit union is outstanding. And that goes for the employees who answer the phones straight up to the CEO and (I wouldn't be surprised) everyone in between.

One piece of information I would like to let people know about right away. I was told that Freedom Northwest will honor all commitments made to people who applied for the CDs.

Once again, high marks to Freedom Northwest Credit Union.
gregk
  |     |   Comment #38
Will the summary of your conversation with FNCU's CEO still be forthcoming?

BTW, Early Withdrawal of funds from an FNCU Certificate is allowable only with the Credit Union's express permission.
alan1
  |     |   Comment #39
gregk -- I hope so; personal circumstances have delayed my writing it up. I don't think it will be terribly useful to anyone (due to what my interests were, not a reflection in any way on the CEO's statements) but there will be some items that might be of interest to some. Here's one that may be of particular interest to you: they normally open 110 accounts per month; during the first three days of this week, while the 3.2% APY offer was still in effect, they opened 270 accounts.

On another note, I'm pleased to report that my CD has been opened; I've received all pertinent documents; there was a slight hiccup with enrolling in online banking, handled extremely rapidly by Freedom Northwest Credit Union. So. I'm now set with them -- apres moi le deluge.
alan1
  |     |   Comment #43
re Comment #38 -- Done. See Comment #42.
Luis
  |     |   Comment #29
No more CD's available. I called them.
RZ
  |     |   Comment #30
The best strategy to catch these opportunities is to check on this Blog and Forum regularly and heed the advice of Ken and the reliable posters
Kaight
  |     |   Comment #31
It is heartening to read, in so many of the comments here, plaudits and high praise for the representatives of this credit union. I am old enough to remember when those words could have been written about reps, and people generally, most anywhere. Today you have to get away from the coasts and venture back into more traditional regions of America to find a behavioral standard which once was ubiquitous. It is so nice, and it is reassuring, to know these pockets of real America once taken for granted, continue to exist.
gregk
  |     |   Comment #33
I'll offer a specific tribute to Lisa Pappalardo for both her genial demeanor and informational acumen, - but with the critical humility of acknowledging what she doesn't (immediately) know or isn't sure about. Among telephone reps it's a rare combination.
gregk
  |     |   Comment #34
Neither bumbler or wiseacre, I mean, - the types we have all here had more than our fill of.
Dandy
  |     |   Comment #36
Yes, I didn't interact w/ any other reps, but the phone was picked up right away and I was transferred w/o wait to Lisa P., who immediately helped me open a 5 yr CD all finished w/i 20 hrs.
Jane
  |     |   Comment #37
Melissa Cook helped me open a CD, and she couldn't have been nicer or more helpful.
mav12
  |     |   Comment #35
interesting if they will offer the cd again ?
oldman87
  |     |   Comment #40
Can anyone who has opened CDs with Freedom this past week help ease my mind by verifying that your CDs were in fact opened and were able to log in online? My sister (on my recommendation) and I both opened a sizable 5 yr CD as well as IRA 5 yr CD (for 2019 contribution) on Wed, funds departed our respective accounts on Thursday, both of us called late Thursday afternoon and spoke to our own CSRs (different reps), both were told that CDs should be opened shortly and we will be notified, I asked my CSR if I can log in first and she said she will work on that and to expect an email shortly with instructions to create online login. Well, nothing happened and no emails on Friday.

So here I'm on Saturday night thinking, a small CU that stormed on the national scene seemingly out of nowhere with way above average rates, couple that with unusually pleasant CSRs and ease of account opening process, can't help but wonder about the old adage "If it sounds too good to be true...". What's worse is that this is my sister's first ever online banking experience after years of encouragement from me. Hopefully I'm just tripping and they just have tons of paper work to catch up after a crazy week, but any reassurance to help me through the weekend would be greatly appreciated,
alan1
  |     |   Comment #41
oldman87 -- I can confirm. Final paragraph of my comment #39:
"On another note, I'm pleased to report that my CD has been opened; I've received all pertinent documents; there was a slight hiccup with enrolling in online banking, handled extremely rapidly by Freedom Northwest Credit Union. So. I'm now set with them -- apres moi le deluge."

Enjoy the weekend. And yes!: "Hopefully I'm just tripping" -- turn on, tune in, drop out.
oldman87
  |     |   Comment #45
Thank you alan1 for the response, really appreciate it!
oldman87
  |     |   Comment #52
Update, received secured email with online login instructions this morning, both CDs were there once I logged in. All is well!
alan1
  |     |   Comment #42
In my Comment #20, I expressed some concerns about Freedom Northwest Credit Union. Shortly thereafter, Comment #24 from dsFNWCU asked me to contact the credit union so that I could speak to their CEO to discuss their financials, etc. I have permission from CEO Scott Garrett to post about our conversation. Before I do that, I want to make clear that my concerns were not primarily about the particular financial situation of this particular credit union. My concerns related to the general issue of a small credit union putting too many eggs into one basket. And Mr. Garrett said "Let's talk about that basket."

Mr. Garrett confirmed that the credit union's "niche" consists of nonconforming mortgages. He also confirmed something I had failed to include in Comment #20 -- those mortgages involve Idaho real estate, not loans in other areas. Mr. Garrett said that the credit union is willing to make loans that "national lenders" wouldn't consider, because those lenders use a formulaic approach that may result in worthy borrowers being denied credit . One example he gave me was an elderly person who had gone through the Great Depression -- this person's experience led him to never get credit -- he had no credit score. Many lenders would not even consider making a loan to such a person. Freedom Northwest approaches things on a more case-by-case basis. He said they have a very low default rate.

In Comment #20, I had written: "As to why they offer such high yields, it _might_ have something to do with the NCUA having given a "thumbs down" to a proposed scheme for Northwest Freedom to gain access to funds by other means. But it's definitely possible that this offer was not related to the NCUA's having rejected their scheme -- I think that occurred about one year ago."

Mr. Garrett said this was not the case. Freedom Northwest offers good CD rates in its region. He said this is independent of the NCUA's rejection of the credit union's plan to raise secondary capital. (Note: I did not use the word "scheme" in a pejorative sense -- it was a proposed plan -- nothing devious or underhanded about it.)

He also said that the 3.20% was not a "special" -- it was their rate. [Note, based on my recollection: I had looked up the rate history for the five-year CD on the credit union's page at depositaccounts.com. I think it showed that the yield had been 2.50% for quite some time. Perhaps this is due to the credit union's rate sheet being a PDF rather than appearing on a regular page on its website. Maybe that wouldn't be picked up by the software used by depositaccounts.com to track rates]
A couple of other things -- the credit union opened 270 accounts on Mon., Tues. and Wed. of last week; they usually open 110 per month. Also, when I praised the customer service provided to me, I learned that the credit union's policy is that any caller will have to speak to no more than two people to accomplish whatever they're trying to day. Mr. Garrett said they don't make callers go through a "maze".

I don't regard nonconforming mortgages as _necessarily_ very risky. But they are less liquid than conforming mortgages. Mr. Garrett said that the credit union holds on to its mortgages -- it's not out to sell them. He acknowledged that if a credit union needs liquidity, they're not the most liquid assets a credit union could have.

I think it's far better for a small, local credit union making such loans to do so in a region it knows, rather than going around financing real estate deals in Florida, Arizona and Nevada (or wherever). But that does run the risk of excessive concentration. If there are problems in that particular region, a financial institution can run into real problems, even if the loans it made were very reasonable at the time. We agreed on that. One example would be a conservative institution making loans to very creditworthy borrowers with good regular employment income or pensions. But if that institution was located in Detroit, and government workers (and others) were losing previously secure jobs, if retirees were having their pensions slashed, etc. -- well, it wasn't that the lender was at fault or made particularly risky loans.

I (and I suspect others here) had been wondering: What is going on with this small credit union in small town Idaho? What is this Freedom Northwest?
And I believe the people at Freedom Northwest had similar thoughts. Who are these people calling us? Where are they coming from? How do they know we exist?

Thanks to people here who posted about their experiences with this credit union. And most important, thanks to the folks at Freedom Northwest. They're terrific. (And if I mischaracterized or misunderstood anything that Mr. Garrett said, I hope that someone from the credit union will read this, and correct me.) And to the Board of Directors and upper management at Freedom Northwest:  There are many employees at the credit union who, at the very least, should get nice bonuses. They richly deserve it.
Buckpasser
  |     |   Comment #46
Alan1 — thank you for taking the time to write this incredibly detailed, informative post. Like you, I was concerned about this CU’s apparent reliance on nonconforming loans, but your report of your conversation with Mr. Garrett — along with the CU’s A rating from DA and 5 rating from another respectable website — help provide some comfort. I note that to the extent they have concerns, DA and the other website focused more on capitalization level than loan quality (indeed, the other website gave it a perfect score on asset quality). Also like you and others, I have been amazed by the level of customer service. My CSR, Kayla, was responsive, knowledgeable and patient, and my phone calls were always answered on the first or second ring.
Choice
  |     |   Comment #47
I’d repeat my comment 28 but it may also be deleted...suffice to say caveat emptor
ConfedrcyDunces
  |     |   Comment #50
What do you people expect the CEO of any financial company to say?

If you are skilled at assessing future defaults you should not be wasting your time on federally insured CDs.
Scott
  |     |   Comment #53
Why should I be concerned about non-conforming loans when my $250K CD is fully insured by NCUA?
ConfedrcyDunces
  |     |   Comment #54
Do you think any of these fine DA folk can define non conforming mortgage?
Buckpasser
  |     |   Comment #55
I can define a nonconforming mortgage — one that does not meet Fannie / Freddie standards, ie, one that Fannie and Freddie won’t buy. But I’m sure you knew that. The reason I care as a CD holder about whether my financial institution issues too many **risky** nonconforming loans even though my CDs are fully insured is the same reason I don’t drive recklessly even though I have auto insurance: dealing with insurance is stressful, a hassle, time consuming (FDIC and NCUA do try to pay out quickly, but sometimes they don’t always do so, and if we are headed toward a real bear market and recession that feature multiple bank failures, that **will** slow payments), and in the end I’d rather put my money in a financially sound and stable institution than depend on the government to quickly, painlessly and fully bail me out. An ounce of prevention is better than a pound of cure. In this case, my research showed, and the DA and Bankrate write ups confirmed, that this CU appears to be safe and sound despite its relatively small size and perhaps unusual loan strategy, and the fact of full NCUA insurance sealed the deal. I don’t know why you (Posts 50 and 54, not 53) find this approach so laughable, contemptible, and/or deserving of your smug responses, as it appears you do. Forgive me if I misunderstood. 
ConfedrcyDunces
  |     |   Comment #60
Buckpasser, congratulations on defining non conforming mortgage. Very impressive.

You are wrong about the time consuming nature of FDIC payments. Banks normally close on a Friday with payments made Monday. There can be a delay if an account is held by a traditional trust and the FDIC has to determine the number of beneficiaries.

I have contempt for you and most of the folks on DA because of your smugness.

You babble "In this case, my research showed, and the DA and Bankrate write ups confirmed, that this CU appears to be safe and sound despite its relatively small size and perhaps unusual loan strategy, and the fact of full NCUA insurance sealed the deal."

You write this to make you feel better, not because you have any experience or insight to make such a claim. Get a productive hobby.
JTS
  |     |   Comment #56
Thanks Alan for the detailed analysis. So long story short...you feel that this institution is strong enough to invest your money?
alan1
  |     |   Comment #57
replying to JTS (#56) and to Scott (#53)
JTS -- I called Northwest Freedom less than an hour after it opened last Monday. I wouldn't have opened the CD if it seemed to me that there was a good chance that the credit union was on the verge of collapse. But 3.2% for 5 years was attractive enough, even though I had some concerns. And when there was a comment from the credit union on this site, saying the CEO waned to talk to me, I followed up. And then I reported on the conversation. The fact that the CEO wanted to talk to me was somewhat amusing (I'm just some guy on the internet); my concerns were unlikely to cause people in Kamiah to head over to the credit union and pull out their money. My concerns today are the same as when I began the process of opening the CD early Monday morning. They're a small credit union, with a concentration in a particular kind of loan in a small area (the area may be the State of Idaho, or maybe it's just the Idaho Panhandle). And those loans are not as easy to sell as conforming mortgages, if an institution needs liquidity. But I'm glad I was able to get the CD, and, like others, I'm thrilled with the service provided by Freedom Northwest's representatives -- they're the gems of the Gem State.

Scott -- In response to your very reasonable question: Leaving aside nonconforming mortgages and concentration of risk, your question raises the more general issue of why does the health of a financial institution matter, if the government is insuring your money. Well, I just got a 5-year CD at 3.20% -- I don't know what rates will be over the next few years, but I'd be pleased to lock in that yield for the term of the certificate. If a financial institution fails and the NCUA mails out a check for the CD, the depositor will get the principal, plus interest, minus any withdrawals, up to the NCUA's deposit insurance limits. The NCUA is an insurer. It is not a surety. They don't guarantee to continue paying the interest that would have been earned in the future -- they send a check, they're done. Similarly, if it were an add-on CD, the depositor couldn't send additional money to the NCUA and earn interest.

Now, if the funds can be re-invested at a better rate, at the time the depositor receives a check, it's like an early withdrawal, without penalty. The depositor benefits. But if rates are down, ....

Safety matters to some extent (how much is up to the investor). And, when it comes to the risks of a credit union or bank collapsing, there are large institutions that have failed.

But I believe that size matters.

I'd rather get a 5-year CD at 3% from a large, healthy credit union (e.g., Navy Federal) than 3.05% from a very small and healthy institution. I don't have a formula for how much less I'd take, but it's something.
JTS
  |     |   Comment #58
Thank you for the response. It all makes sense and I appreciate your time and efforts.
ConfedrcyDunces
  |     |   Comment #59
Preach Alan!!

The nice thing about Navy Federal is the upfront disclosure that if the company does not earn enough money to pay dividends, the dividends will not be paid.

There is no risk of default or a "30 day letter" because Navy has already notified it will stop paying dividends if it lacks the earnings.

One question: if Navy decides to stop paying dividends, are the dividends simply never paid, or do they accrue, for payment at a possible future date?

------------
Dividends are a division and distribution of earnings among members, after all expenses have been paid and the required amount has been set aside for reserves.
Payment of all dividends is dependent on the availability of earnings at the end of the period.
gregk
  |     |   Comment #61
While no one who managed to get in on this offer may now regret it given the immediately subsequent rate collapse, I wonder if current events and their economic effects (which may persist over some years) heighten anyone's expressed concerns about FNWCU small size and non-diversified business strategy? How will the potential fallout particularly impact the performance of "nonconforming mortgages", and are the dangers to FNWCU greater now than for any other reasonably healthy FI? While strong by certain measures, their Capitalization is not the best.
Leaving aside the NCUA backstop, is there any reason to more closely evaluate alan1's rationale for questioning "whether they'll still be around by the maturity date"? The new Financial Crisis as it reverberates through the economy is going to cause damage. Is FNWCU a haven in the storm as one hopes larger and stronger CU's will be where we have funds deposited, or just a thin reed in danger of being swept away should the very worst happen?
lou
  |     |   Comment #62
If we continue down the current path, we may be looking at a depression with 20% plus unemployment rates, and suffering and pain of the likes we haven't seen since the 1930's. It won't just be this credit union that's hurting. We need to get back on a normal footing and accept the risks associated with this virus. People need to stop panicking and carry on with their lives. Obviously, everyone should take precautions, but shutting down the economy is not a rational answer to this problem.
Deplorable Fan
  |     |   Comment #63
Do you consider Rush Limbaugh a journalist?

The goal is to delay millions of sick people, so our third rate health care system can treat some of them.
lou
  |     |   Comment #64
No. but I consider Mohamed El-Erian an expert on the economy and financial markets, and he is predicting a depression (not a recession) if we continue to shutdown the economy. Someone needs to do a cost benefit analysis and decide if an economic meltdown is an acceptable outcome vs the draconian measures taken in response to this virus.
Deplorable Fan
  |     |   Comment #65
Who cares? Americans are fat and over consume.

Everyone knows a permanent slowdown has to come sometime.
gregk
  |     |   Comment #67
Wondering if you still feel the same way two weeks later, Lou?
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gregk
  |     |   Comment #66
Received an email from FNWCU (as did all members, no doubt) allowing us up to 50% penalty-free withdrawals from any CD. While one can only praise such a gesture, might the Credit Union have far more cash than it can now utilize given the stunning financial breakdown so soon after acquiring a deluge of new deposits from new members rushing in to establish 3.2% 5 year CD's?

I wonder if other FI's might follow suit for their own reasons, hoping to liquidate very high-yielding accounts given current market conditions and prospects.
gregk
  |     |   Comment #68
Anyone see quarterly interest posted to their account for CD's opened in March?

It was my understanding that would happen, but it didn't.
gregk
  |     |   Comment #72
FWIW, I've now learned that each individual CD established with NWFCU is on its own discrete (quarterly) earnings track, with interest posted every 3 months from the date of opening, rather than correlated with the uniform calendar (March 31st, June 30th, etc.). I've not previously run across that way of accounting, which seems peculiar, but I guess OK.
gregk
  |     |   Comment #73
Anyone now regretting (or at least questioning) placing funds with such a small and undiversified operation as FNWCU given the new economic reality we all reside in for the forseeable future with Covid-9? I feel more than a little uncomfortable myself, NCUA insurance notwithstanding. It's pretty clearly stated in the CU's CD disclosures that interest is paid only from current earnings after reserve allocations are completed, so in the event of "bad" years to come that 3.2% we were all excited about may dissolve into something much less.

I'd still like to know if anyone saw quarterly interest posted to their CD's March 31st, as it's rather odd to me that a calendar system wouldn't be followed for that purpose.
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