Safe and Sound

NORTHERN REDWOOD

ARCATA, CA
3
Star Rating
NORTHERN REDWOOD is an NCUA-insured credit union founded in 1955 and currently based in ARCATA, CA. Regulatory filings show the credit union having assets of $18.5 million, as of June 30, 2017.

With 5 full-time employees, the credit union has amassed loans and leases worth $11.8 million. Its 2,282 members currently have $16.9 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, NORTHERN REDWOOD exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three important criteria Bankrate used to score U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for members when a credit union is struggling financially. It follows then that a credit union's level of capital is a valuable measurement of its financial fortitude. When looking at safety and soundness, the more capital, the better.

NORTHERN REDWOOD received a score of 6 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, failing to reach the national average of 15.26.

NORTHERN REDWOOD appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 8.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the credit union's loan loss reserves and overall capitalization.

A credit union with large numbers of these kinds of assets may eventually be forced to use capital to absorb losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a failure in the future.

NORTHERN REDWOOD did better than the national average of 38.15 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A lower-than-average ratio of problem assets of 3.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the credit union, giving a boost to its capital buffer, or be used to address problematic loans, likely making the credit union more resilient in times of trouble. Conversely, losses take away from a credit union's ability to do those things.

NORTHERN REDWOOD received below-average marks on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

One indication that the credit union is running ahead of its peers in this area was its earnings ratio of 3.00 percent in our test, better 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.