High CD Rates from a Tiny Credit Union - Concerns?

In the last few months we have added several new institutions to our rate tables. If you haven't reviewed the rate tables in awhile, you might to take a new look. I was just reviewing them, and I came across some interesting credit unions. These are tiny credit unions which offer some very high deposit rates. As you would expect, these credit unions have narrow fields of membership. However, they do include some areas that have large populations. That had me thinking of an interesting question. If you could qualify, would you trust a tiny credit union with a large deposit?

As with any federally insured institution, it makes sense to stay under the FDIC and NCUA limits. These tiny credit unions that I list below are all federally insured by the NCUA. It should be noted that many of the credit unions that have been liquidated in the last few years have been tiny credit unions with under $10M in deposits. In several of these cases the NCUA didn't find another credit union to take over. So they just mailed checks to members for their insured deposits. Even though many of the liquidated credit unions were small, there haven't been many failed credit unions. Only 19 were liquidated in 2010. As a comparison, 157 banks failed in 2010.

I came across three very small credit unions which are listing very competitive rates. All have rate tables with recent effective dates. Nevertheless, it would be a good idea to call the credit union to verify rates before visiting. Rates listed below are accurate as of 4/20/2011.

• Shiloh of Alexandria Federal Credit Union is listing a 5.05% APY 1-year CD. This tiny credit union located in Alexandria, Virginia. It has only $1.47 million in deposits and 617 members. The NCUA data lists zero full-time employees which makes sense since they're only open on the weekend. To join this credit union you must be a member of the Shiloh Baptist Church or live, work or worship in the Parker Gray section of Alexandria.
• Texas Workforce Credit Union is listing several competitive CD rates from 1.76% APY for 1 year to 2.52% APY for 4 years. This tiny credit union is located in San Antonio, Texas. This is larger than the Virginia credit union, but not by much. It has $7.94 million in deposits, 998 members and 4 full-time employees. As you might expect from the name, to join you must be an employee and retiree of the Texas Workforce Commission. However, they also have extended their field of membership to include anyone who lives, works or goes to school within a 10 mile radius of their office. Since it's located in the northwest part of San Antonio, many in the city should be eligible to join.
• Charles St. Community Credit Union is also listing several competitive CD rates from 1.26% APY for 3 months to 3.20% APY for 5 years. This credit union in Marion, Indiana is probably a little too big to be considered tiny, but it's still small. It has $18.38 million in deposits, 4,242 members and 10 full-time employees. Even though it's larger than the other two, fewer people will probably eligible to join. To be eligible to join, you have to be live, work, go to school or worships in the small Indiana county of Grant.

To view the other rates, refer to our rate tables from the menu on top of the page.