Safe and Sound

LAKE MICHIGAN

GRAND RAPIDS, MI
5
Star Rating
GRAND RAPIDS, MI-based LAKE MICHIGAN is an NCUA-insured credit union started in 1933. The credit union holds assets of $5.18 billion, according to June 30, 2017, regulatory filings.

With 1,045 full-time employees, the credit union holds loans and leases worth $3.65 billion. LAKE MICHIGAN's 306,218 members currently have $4.07 billion in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, LAKE MICHIGAN exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the credit union did on the three major criteria Bankrate used to score American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a credit union's financial resilience. It acts as a buffer against losses and affords protection for members during times of financial trouble for the credit union. When looking at safety and soundness, the higher the capital, the better.

LAKE MICHIGAN fell short of the national average of 15.26 on our test to measure capital adequacy, racking up 14 out of a possible 30 points.

LAKE MICHIGAN's capitalization ratio of 11.00 percent in our test was worse than the average for all credit unions, suggesting that it's on less solid financial footing than its peers.

Asset Quality Score

This test's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having a large number of these kinds of assets may eventually force a credit union to use capital to cover losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the credit union, diminishing earnings and increasing the chances of a future failure.

LAKE MICHIGAN scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 38.15.

Troubled assets made up 1.00 percent of LAKE MICHIGAN's total assets in our test, lower than the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at making money has an effect on its long-term survivability. A credit union can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, likely making the credit union better able to withstand financial shocks. Obviously, credit unions that are losing money have less ability to do those things.

On Bankrate's test of earnings, LAKE MICHIGAN scored 22 out of a possible 30, beating the national average of 10.31.

The credit union had an earnings ratio of 13.00 percent in our test, better than the average for all credit unions, a sign that it's outperforming its peers in this area.








WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.