Safe and Sound

FOREST AREA

Fife Lake, MI
5
Star Rating
Fife Lake, MI-based FOREST AREA is an NCUA-insured credit union founded in 1983. The credit union has assets of $108.1 million, according to December 31, 2017, regulatory filings.

Members have $48.3 million on deposit tended by 33 full-time employees. With that footprint, the credit union has amassed loans and leases worth $48.3 million. Its 11,613 members currently have $90.2 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FOREST AREA exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the credit union faired on the three important criteria Bankrate used to evaluate American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a credit union's financial fortitude. It acts as a buffer against losses and provides protection for members during times of financial instability for the credit union. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, FOREST AREA scored 20 out of a possible 30 points, beating the national average of 15.65.

FOREST AREA's capitalization ratio of 20.00 percent in our test was better than the average for all credit unions, suggesting that it's stronger than its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as past-due mortgages, on the credit union's loan loss reserves and overall capitalization.

Having lots of these kinds of assets could eventually require a credit union to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the credit union, diminishing earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, FOREST AREA scored 40 out of a possible 40 points, exceeding the national average of 38.09 points.

A below-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

A credit union's earnings performance affects its safety and soundness. A credit union can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, likely making the credit union better prepared to withstand economic shocks. Obviously, credit unions that are losing money are less able to do those things.

FOREST AREA exceeded the national average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

FOREST AREA had an earnings ratio of 0.00 percent in our test, higher than the average for all credit unions, suggesting that it's beating 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.