Safe and Sound

ARKANSAS EDUCATION ASSOCIATION

LITTLE ROCK, AR
4
Star Rating
Founded in 1978, ARKANSAS EDUCATION ASSOCIATION is an NCUA-insured credit union based in LITTLE ROCK, AR. As of December 31, 2017, the credit union held assets of $6.7 million.

Members have $4.0 million on deposit tended by 3 full-time employees. With that footprint, the credit union has amassed loans and leases worth $4.0 million. Its 2,819 members currently have $5.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, ARKANSAS EDUCATION ASSOCIATION exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three major criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for members when a credit union is struggling financially. Therefore, an institution's level of capital is an important measurement of its financial strength. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a credit union's capital, ARKANSAS EDUCATION ASSOCIATION scored 20 out of a possible 30 points, better than the national average of 15.65.

ARKANSAS EDUCATION ASSOCIATION appears to be more well prepared for financial trouble than its peers, with a capitalization ratio of 20.00 percent in our test, higher than the average for all credit unions.

Asset Quality Score

This test is intended to estimate how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

A credit union with large numbers of these types of assets may eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in lower earnings and potentially more risk of a failure in the future.

ARKANSAS EDUCATION ASSOCIATION scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 38.09.

Troubled assets made up 0.00 percent of the credit union's total assets in our test, lower than the national average and potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at making money has an effect on its long-term survivability. Earnings may be retained by the credit union, expanding its capital buffer, or be used to address problematic loans, likely making the credit union better able to withstand financial shocks. Losses, on the other hand, diminish a credit union's ability to do those things.

ARKANSAS EDUCATION ASSOCIATION scored 6 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 10.11.

ARKANSAS EDUCATION ASSOCIATION had an earnings ratio of 0.00 percent in our test, above the average for all credit unions, suggesting that it's doing better than 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.