Safe and Sound

DOWAGIAC AREA

DOWAGIAC, MI
2
Star Rating
DOWAGIAC, MI-based DOWAGIAC AREA is an NCUA-insured credit union started in 1972. The credit union has $17.5 million in assets, according to December 31, 2017, regulatory filings.

Members have $8.0 million on deposit tended by 4 full-time employees. With that footprint, the credit union currently holds loans and leases worth $8.0 million. DOWAGIAC AREA's 2,405 members currently have $16.0 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DOWAGIAC AREA exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union faired on the three major criteria Bankrate used to evaluate U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial stability, capital is crucial. It acts 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.

DOWAGIAC AREA fell short of the national average of 15.65 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

DOWAGIAC AREA's capitalization ratio of 8.00 percent in our test was below the average for all credit unions, suggesting that it's weaker than its peers.

Asset Quality Score

This test's purpose is to try to understand how the credit union's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid mortgages.

A credit union with lots of these kinds of assets may eventually be forced to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, pushing down earnings and elevating the risk of a failure in the future.

DOWAGIAC AREA scored 28 out of a possible 40 points on Bankrate's test of asset quality, lower than 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 greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money has an effect on its long-term survivability. A credit union can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the credit union more resilient in tough times. Conversely, losses lessen a credit union's ability to do those things.

DOWAGIAC AREA scored 0 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, suggesting that it's outperforming 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.