Safe and Sound

NORTHERN LIGHTS COMMUNITY

CHATHAM, MI
4
Star Rating
NORTHERN LIGHTS COMMUNITY is an NCUA-insured credit union founded in 1945 and currently based in CHATHAM, MI. As of December 31, 2017, the credit union had assets of $7.9 million.

Thanks to the work of 4 full-time employees, the credit union has amassed loans and leases worth $4.1 million. Its 1,495 members currently have $6.9 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, NORTHERN LIGHTS COMMUNITY exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union faired on the three key criteria Bankrate used to score American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for members during times of financial instability for the credit union. It follows then that when it comes to measuring an an institution's financial stability, capital is valuable. From a safety and soundness perspective, more capital is better.

NORTHERN LIGHTS COMMUNITY scored below the national average of 15.65 on our test to measure the adequacy of a credit union's capital, racking up 12 out of a possible 30 points.

NORTHERN LIGHTS COMMUNITY appears to be on less solid financial footing than its peers in this area, with a capitalization ratio of 12.00 percent in our test, lower than the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as past-due mortgages, on the credit union's capitalization and allocated loan loss reserves.

A credit union with a large number of these kinds of assets may eventually be required to use capital to cover losses, diminishing its equity cushion. 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 diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, NORTHERN LIGHTS COMMUNITY scored 40 out of a possible 40 points, better than the national average of 38.09 points.

A lower-than-average ratio of problem 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 profitability has an effect on its long-term survivability. A credit union can retain its earnings, increasing its capital buffer, or use them to address problematic loans, likely making the credit union more resilient in tough times. Conversely, losses reduce a credit union's ability to do those things.

On Bankrate's earnings test, NORTHERN LIGHTS COMMUNITY scored 8 out of a possible 30, below the national average of 10.11.

One indication that the credit union is beating its peers in this area was its earnings ratio of 0.00 percent in our test, better than the average for all credit unions.

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.