Safe and Sound

NORTHERN LIGHTS

SAINT JOHNSBURY, VT
4
Star Rating
SAINT JOHNSBURY, VT-based NORTHERN LIGHTS is an NCUA-insured credit union started in 1951. The credit union holds assets of $26.5 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 10 full-time employees, the credit union has amassed loans and leases worth $21.6 million. NORTHERN LIGHTS's 4,912 members currently have $23.3 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, NORTHERN LIGHTS exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the credit union faired on the three major criteria Bankrate used to evaluate American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial strength, capital is essential. It works as a buffer against losses and as protection for members when a credit union is experiencing economic instability. When looking at safety and soundness, the higher the capital, the better.

NORTHERN LIGHTS finished below the national average of 15.65 on our test to measure the adequacy of a credit union's capital, scoring 14 out of a possible 30 points.

NORTHERN LIGHTS had a capitalization ratio of 14.00 percent in our test, below 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's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due loans.

A credit union with extensive holdings of these kinds of assets may eventually have to use capital to cover losses, cutting down on 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, resulting in diminished earnings and potentially more risk of a future failure.

NORTHERN LIGHTS scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 38.09.

A below-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's profitability affects its long-term survivability. A credit union can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the credit union better prepared to withstand economic trouble. However, credit unions that are losing money are less able to do those things.

On Bankrate's earnings test, NORTHERN LIGHTS scored 12 out of a possible 30, beating the national average of 10.11.

NORTHERN LIGHTS had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, a sign 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.