Safe and Sound

ADVANTAGE

Newton, IA
5
Star Rating
ADVANTAGE is a Newton, IA-based, NCUA-insured credit union founded in 1937. The credit union holds $68.6 million in assets, according to December 31, 2017, regulatory filings.

With 14 full-time employees, the credit union currently holds loans and leases worth $34.8 million. Its 5,709 members currently have $56.8 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, ADVANTAGE exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three key criteria Bankrate used to grade U.S. credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for members when a credit union is struggling financially. Therefore, a credit union's level of capital is a key measurement of its financial strength. From a safety and soundness perspective, the higher the capital, the better.

ADVANTAGE scored 24 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, beating out the national average of 15.65.

ADVANTAGE appears to be stronger than its peers, with a capitalization ratio of 24.00 percent in our test, better than the average for all credit unions.

Asset Quality Score

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

Having extensive holdings of these kinds of assets suggests a credit union could eventually have to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in diminished earnings and potentially more risk of a future failure.

ADVANTAGE scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 38.09.

A below-average ratio of problem assets of 0.00 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 affects 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 tough times. Losses, on the other hand, take away from a credit union's ability to do those things.

On Bankrate's earnings test, ADVANTAGE scored 12 out of a possible 30, exceeding the national average of 10.11.

One indication that ADVANTAGE is running ahead of its peers in this area was its earnings ratio of 0.00 percent in our test, above 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.