Safe and Sound

COMMUNITY ALLIANCE

NOVI, MI
2
Star Rating
COMMUNITY ALLIANCE is an NCUA-insured credit union founded in 1966 and currently headquartered in NOVI, MI. The credit union holds $104.0 million in assets, according to December 31, 2017, regulatory filings.

Members have $95.5 million on deposit tended by 37 full-time employees. With that footprint, the credit union holds loans and leases worth $95.5 million. COMMUNITY ALLIANCE's 10,917 members currently have $83.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, COMMUNITY ALLIANCE exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's an analysis of how the credit union did on the three major criteria Bankrate used to evaluate American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial fortitude, capital is important. It works as a buffer against losses and as protection for members when a credit union is experiencing financial trouble. When it comes to safety and soundness, the more capital, the better.

COMMUNITY ALLIANCE received a score of 8 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, coming in below the national average of 15.65.

COMMUNITY ALLIANCE's capitalization ratio of 8.00 percent in our test was less than the average for all credit unions, an indication that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid mortgages, on the credit union's capitalization and allocated loan loss reserves.

Having large numbers of these types of assets could eventually force a credit union 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 thus aren't earning interest for the credit union, diminishing earnings and increasing the chances of a future failure.

On Bankrate's asset quality test, COMMUNITY ALLIANCE scored 32 out of a possible 40 points, failing to reach the national average of 38.09 points.

A lower-than-average ratio of problem assets of 0.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money has an effect on its safety and soundness. A credit union can retain its earnings, expanding its capital cushion, or use them to address problematic loans, likely making the credit union more resilient in times of trouble. Conversely, losses reduce a credit union's ability to do those things.

COMMUNITY ALLIANCE scored 4 out of a possible 30 on Bankrate's earnings test, below the national average of 10.11.

COMMUNITY ALLIANCE had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, suggesting that it's running ahead of 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.