Safe and Sound

COTTONWOOD COMMUNITY

Cottonwood, ID
5
Star Rating
Started in 1942, COTTONWOOD COMMUNITY is an NCUA-insured credit union based in Cottonwood, ID. The credit union has assets of $92.5 million, according to December 31, 2017, regulatory filings.

With 21 full-time employees, the credit union currently holds loans and leases worth $71.4 million. COTTONWOOD COMMUNITY's 4,820 members currently have $75.6 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, COTTONWOOD COMMUNITY exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the credit union faired 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 acts as a bulwark against losses and as protection for members when a credit union is struggling financially. It follows then that an institution's level of capital is an essential measurement of its financial strength. When looking at safety and soundness, more capital is better.

COTTONWOOD COMMUNITY racked up 28 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 15.65.

COTTONWOOD COMMUNITY had a capitalization ratio of 28.00 percent in our test, above the average for all credit unions, a sign that it could have an easier time weathering financial trouble than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with a large number of these types of assets may eventually have to use capital to cover losses, cutting down on its buffer of equity. 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, pushing down earnings and elevating the risk of a future failure.

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

A lower-than-average ratio of troubled 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 long-term survivability. Earnings can be retained by the credit union, increasing its capital buffer, or be used to deal with problematic loans, potentially making the credit union better able to withstand economic shocks. Losses, on the other hand, lessen a credit union's ability to do those things.

COTTONWOOD COMMUNITY scored 18 out of a possible 30 on Bankrate's earnings test, above the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, above 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.