Safe and Sound

FIRST AREA

SAGINAW, MI
3
Star Rating
FIRST AREA is an NCUA-insured credit union started in 1961 and currently based in SAGINAW, MI. The credit union holds $29.9 million in assets, according to December 31, 2017, regulatory filings.

With 7 full-time employees, the credit union holds loans and leases worth $18.6 million. Its 3,894 members currently have $26.5 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FIRST AREA exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired on the three major criteria Bankrate used to evaluate U.S. credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for members during times of economic instability for the credit union. It follows then that when it comes to measuring an a credit union's financial fortitude, capital is crucial. When it comes to safety and soundness, more capital is better.

FIRST AREA received a score of 14 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, less than the national average of 15.65.

FIRST AREA had a capitalization ratio of 14.00 percent in our test, below the average for all credit unions, suggesting that it's on less solid financial footing than its peers.

Asset Quality Score

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

Having a large number of these types of assets suggests a credit union may eventually have to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in depressed earnings and potentially more risk of a failure in the future.

FIRST AREA scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 38.09.

The credit union's ratio of troubled assets was 0.00 percent 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 affects its long-term survivability. Earnings may be retained by the credit union, boosting its capital buffer, or be used to deal with problematic loans, likely making the credit union more resilient in tough times. Conversely, losses reduce a credit union's ability to do those things.

FIRST AREA scored 2 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 10.11.

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