Safe and Sound

PREFERRED

Grand Rapids, MI
5
Star Rating
PREFERRED is an NCUA-insured credit union started in 1968 and currently headquartered in Grand Rapids, MI. As of December 31, 2017, the credit union had assets of $167.4 million.

Members have $108.8 million on deposit tended by 71 full-time employees. With that footprint, the credit union has amassed loans and leases worth $108.8 million. PREFERRED's 24,359 members currently have $139.6 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, PREFERRED exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the credit union did on the three important criteria Bankrate used to evaluate U.S. credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial resilience, capital is essential. It acts as a bulwark against losses and provides protection for members during times of economic trouble for the credit union. When looking at safety and soundness, the higher the capital, the better.

PREFERRED exceeded the national average of 15.65 points on our test to measure capital adequacy, receiving a score of 18 out of a possible 30 points.

PREFERRED's capitalization ratio of 18.00 percent in our test was higher than the average for all credit unions, an indication that it's on more solid financial footing than its peers.

Asset Quality Score

This test is intended to try to understand how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having a large number of these types of assets may eventually force a credit union to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, diminishing earnings and increasing the risk of a future failure.

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

PREFERRED's ratio of troubled assets was 0.00 percent in our test, below the national average and potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's profitability affects its safety and soundness. Earnings may be retained by the credit union, expanding its capital buffer, or be used to address problematic loans, likely making the credit union better able to withstand economic trouble. Credit unions that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, PREFERRED scored 12 out of a possible 30, better than the national average of 10.11.

One indication that the credit union is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, above 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.