Memorandum on findings

PO Box 468
Gardner, MA 01440-0468

STAR RATING: 3 starstarstar
Predictive Indicator + (improve)
As of March 31, 2014
Credit Union ID 24279

A credit union is a nonprofit, cooperative financial institution, owned and administered by individual members, who must meet eligibility requirements to join. Credit unions pay no federal income tax. Community development credit unions are chartered to serve the needs of low income members who reside in financially distressed or under-served communities.

The Bankrate proprietary credit union rating model analyzes capitalization, asset quality, earnings, and liquidity to produce composite and component "Star" ratings that can be used as a measure of the rated entity's financial safety and soundness. Additionally, early warning components of the model highlight operating characteristics of immediate concern and recommended follow-up actions. The analyses are not adjusted for TARP funding and those institutions receiving funds may receive ratings that would differ were the TARP funds adjusted out of the analyses. You can check whether or not this institution has received TARP funding and whether or not they have paid it back at

Institution Name GFA
Report Date March 31, 2014
Report Period 3 months
Star Composite Rating, Percentile Rank 3 /30.47
Predictive Indicator + (improve)
Earnings Rating, Percentile Rank 2 /47.91
Asset Quality Rating, Percentile Rank 4 /23.23
Capital Rating, Percentile Rank 2 /31.57
Liquidity Rating, Percentile Rank 4 /70.88
Institution Asset Size 419.1483 million
Deposits 320.2815 million
Loans 194.9349 million
Equity 40.8499 million
Net Profit/Loss 439.25 thousand


Component star rating: 2 starstar
Capital highlights

Capitalization stands as protection against loss for credit union members, creditors and, if applicable, the insurer. Regulators place a high degree of importance upon assessments of capitalization.

Key measures of Capital AdequacyRatio (%)Assessment
Net Capital / Assets 9.75Approximates Peer Norm
Capital (1) / Assets 10.38Approximates Peer Norm
(1) Includes loan loss allowance.

Component star rating: 4 starstarstarstar
Asset quality highlights

Asset quality is a major determinant of the viability of any banking institution. Poor asset quality will have a very direct impact upon other components and regulators invest substantial amounts of time and resources in gauging the quality of loans and investments.

Key Asset Quality information and ratios:Ratio (%)Assessment
Nonperforming Asset Ratio (2)8.98Relatively Low
Loss Reserve Coverage (3)71.45Well Below Normal
Asset Growth Rate -0.44Below Normal
(2) Nonperforming Assets/Equity plus Loss Reserves

(3) Loan Loss reserves/Delinquent Loans

Component star rating: 2 starstar
Earnings highlights

A credit union's profitability is critical to building capital and establishing adequate loss reserves.

Key Earnings information and ratios:Ratio (%)Assessment
Return on Average Assets 0.37Below Average
Overhead / Average Assets 2.67Significantly Higher Than Average
Note: The earnings assessment is based on the latest four quarters of income and expense.

Component star rating: 4 starstarstarstar
Liquidity highlights

Liquidity provides funding for normal operations and represents a reserve for unanticipated disintermediation.

Key measures of Liquidity:Ratio (%)Assessment
Balance Sheet Liquidity24.13Reasonably good

Early warning highlights

Early warning indicators identify areas of potential concern, which may lead to financial deterioration and thus, require inquiry or in depth investigation.
For this institution we have noted:

  • No operating characteristics requiring specific follow-up

Institution Commentary

OVERVIEW of Institution
GFA is a federally chartered credit union, which, as of March 31, 2014, reported total assets of approximately $419.1483 million. At that date, loans and deposits held by the institution amounted to $194.9349 million and $320.2815 million, respectively. Equity, the difference between a credit union's total assets and total liabilities, was determined to have been $40.8499 million, which was 9.75% of total assets.

Bankrate believes that, as of March 31, 2014, this credit union exhibited a generally satisfactory condition, characterized by below standard capitalization, good asset quality, lower than normal profitability, and seemingly ample liquidity.

Balance sheet structural changes, through the one year period of time ended March 31, 2014, have had little or no positive, and quite possibly a negative, impact upon the institution's capital position. Our analytical methodology does take into account the quantity, quality, durability, and direction of net worth, and, as set forth above, we have determined, based upon our series of tests, that this credit union demonstrates below standard capitalization.

The institution reveals, as previously stated, good asset quality. That conclusion incorporates our analysis of data depicting regional economic conditions as well as our computations of a relatively low March 31, 2014 nonperforming asset ratio and well below normal reserve coverage for nonperforming loans.

Credit card lending activities should not, based on our analysis of asset quality trends and conditions, have a substantial negative impact upon future results.

For the year ended March 31, 2014, this institution recorded a net profit of $1,508.01 thousand, which represented a return on average assets (ROA) of 0.37%. Year earlier four quarter results amounted to a net profit of $842,431, or a 0.22% ROA. ROA is the key measurement of profitability within the credit union industry, and the industry's ROA, for the three months ended March 31, 2014, approximated 0.78%.

We have concluded that, for the four quarters ending March 31 2014, the institution achieved a below average return on average assets. Strict expense control defined by a much better than average overhead ratio is in evidence. We have noted that the insitution's profitability performance, between the twelve months ending March 31 , 2013 and the twelve months ending March 31 , 2014 exceeded the industry peer comparison.

As of March 31, 2014, the institution displayed reasonably good balance sheet liquidity.

Accounting principles require some securities to be categorized as "Available-for-Sale." Changes in market value of these securities are reflected through the GAAP (Generally Accepted Accounting Principles) net worth of the institution. Based upon the credit union's present balance sheet, changes in the value of the current level of securities reported as are very likely to have a substantial impact upon future net worth of the credit union.

This credit union has been rated generally satisfactory.
Negative factors that impacted that rating follow:

  • Capitalization
  • Earnings

As stated, we have determined a Composite Star rating for this credit union of 3 starstarstar , indicative of a generally satisfactory financial condition. At times, conditions of financial institutions change rapidly and significantly. Hence, our Safe & Sound Star ratings should not be deemed predictive of likely future ratings. However, in view of early warning indicators set forth within this report, in combination with the institution's financial data, we believe that the Star rating for this institution is likely to improve within the ensuing twelve month period.

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