KBRA Affirms Ratings for Idaho Central Credit Union

KBRA affirms the deposit and senior unsecured debt ratings of BBB, the subordinated debt rating of BBB-, and the short-term deposit and debt ratings of K3 for Chubbuck, Idaho-based Idaho Central Credit Union (“Idaho Central” or "ICCU"). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

Idaho Central’s ratings are supported by a stable earnings track record and a solid membership base, driven by a dynamic deposit franchise across economically divergent MSAs - namely in Idaho and Washington – both of which are trending positively. As such, earnings are underpinned by its consumer-focused deposit base, with core deposits representing 83% of total funding at 2Q25. Despite elevated funding costs (2.65% at 2Q25) attributable to the credit union’s funding model, the margin has been supported by increased earning asset balances and yields, as loans account for 87% of total assets, generating an average ROA of 1.06% over the last four and a half years. The earnings base is further bolstered by a diversified revenue model, with spread income complemented by solid fee revenue largely derived from fee and CUSO income. However, following the implementation of the Durbin Amendment in 3Q24, noninterest income as a percentage of revenue declined to 29% from 35%. Nonetheless, given solid revenue levels and contained expenses, Idaho Central has maintained an average efficiency ratio of 67% over the last five years, which is, in our view, adequate for the rating category. Asset quality metrics have remained solid and better than peers, which we attribute to management’s conservative underwriting and economic stability across the markets it serves. That said, given the higher interest rate environment, ICCU has experienced an uptick in charge-offs in 1H25, to 0.44%, reflective of its concentration in consumer loans. Although below similarly sized peers, loan loss reserve of 0.63% adequately covers NPAs by 185% at 2Q25. The capital profile has broadly lagged most peers, particularly its net worth ratio, which hovered near 8% prior to the $80 million subordinated debt issuance in 4Q23. Since then, capital improvement has been limited due to balance sheet growth despite solid earnings accretion. Going forward, KBRA expects ICCU to maintain similar capital levels in line with its overall risk profile and earnings base.

Rating Sensitivities

Consistently generating ROA around 1.0%, above peer capital metrics, and maintenance of solid credit quality metrics could result in positive rating momentum over time. Conversely, downward pressure on capital metrics, notably sustaining a net worth ratio below 8.0%, a material deterioration in credit costs resulting in elevated charge-offs, weakened profitability, or material deposit outflows could negatively impact the ratings.

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Methodologies