Safe and Sound

LAKES AREA

GRAND RAPIDS, MN
1
Star Rating
LAKES AREA is an NCUA-insured credit union founded in 1953 and currently based in GRAND RAPIDS, MN. The credit union holds $23.2 million in assets, according to June 30, 2017, regulatory filings.

With 5 full-time employees, the credit union has amassed loans and leases worth $17.7 million. Its 3,638 members currently have $19.8 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, LAKES AREA exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired on the three key criteria Bankrate used to grade American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial stability, capital is useful. It works as a bulwark against losses and affords protection for members when a credit union is experiencing economic trouble. From a safety and soundness perspective, more capital is better.

On our test to measure the adequacy of a credit union's capital, LAKES AREA received a score of 0 out of a possible 30 points, falling short of the national average of 15.26.

LAKES AREA had a capitalization ratio of 5.00 percent in our test, less than the average for all credit unions, suggesting that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

This test is intended 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 large numbers of these kinds of assets may eventually be required to use capital to cover losses, decreasing 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, resulting in lower earnings and potentially more risk of a failure in the future.

LAKES AREA scored 16 out of a possible 40 points on Bankrate's asset quality test, less than the national average of 38.15.

Troubled assets made up 47.00 percent of the credit union's total assets in our test, above the national average and something to keep an eye on.

Earnings score

How successful a credit union is at earning money affects its long-term survivability. Earnings may be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, likely making the credit union better prepared to withstand financial trouble. Obviously, credit unions that are losing money have less ability to do those things.

LAKES AREA did below-average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

LAKES AREA had an earnings ratio of -59.00 percent in our test, less than the average for all credit unions, a sign that it's underperforming 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.