Safe and Sound

LINN AREA

Cedar Rapids, IA
4
Star Rating
Cedar Rapids, IA-based LINN AREA is an NCUA-insured credit union founded in 1935. Regulatory filings show the credit union having $423.0 million in assets, as of June 30, 2017.

Thanks to the efforts of 93 full-time employees, the credit union holds loans and leases worth $348.1 million. LINN AREA's 25,271 members currently have $307.2 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, LINN AREA exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the credit union did on the three key criteria Bankrate used to grade American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a credit union's financial resilience. It acts as a bulwark against losses and provides protection for members when a credit union is experiencing financial trouble. From a safety and soundness perspective, the higher the capital, the better.

LINN AREA scored below the national average of 15.26 on our test to measure the adequacy of a credit union's capital, receiving a score of 8 out of a possible 30 points.

LINN AREA had a capitalization ratio of 9.00 percent in our test, lower than the average for all credit unions, suggesting that it's weaker than its peers.

Asset Quality Score

This test's purpose is to try to understand how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due loans.

Having large numbers of these kinds of assets could eventually force a credit union to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, decreasing earnings and elevating the risk of a future failure.

LINN AREA finished below the national average of 38.15 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

Troubled assets made up 10.00 percent of the credit union's total assets in our test, higher than the national average and a potential area of concern.

Earnings score

A credit union's ability to earn money affects its safety and soundness. A credit union can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, potentially making the credit union better able to withstand financial shocks. Obviously, credit unions that are losing money are less able to do those things.

LINN AREA scored 18 out of a possible 30 on Bankrate's test of earnings, better than the national average of 10.31.

One sign that the credit union is beating its peers in this area was its earnings ratio of 8.00 percent in our test, higher than the average for all credit unions.

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.