Safe and Sound

SMART CHOICE

CLEVELAND, TN
5
Star Rating
SMART CHOICE is a CLEVELAND, TN-based, NCUA-insured credit union that opened its doors in 2003. As of December 31, 2017, the credit union had assets of $3.4 million.

The credit union has amassed loans and leases worth $1.5 million. SMART CHOICE's 1,349 members currently have $2.6 million in shares with the credit union.

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

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial resilience. It works as a cushion against losses and as protection for members when a credit union is struggling financially. When it comes to safety and soundness, more capital is better.

SMART CHOICE fell short of the national average of 15.65 on our test to measure capital adequacy, achieving a score of 12 out of a possible 30 points.

SMART CHOICE had a capitalization ratio of 12.00 percent in our test, below the average for all credit unions, suggesting that it could be less resilient in a crisis than its peers.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid loans, on the credit union's capitalization and allocated loan loss reserves.

A credit union with extensive holdings of these types of assets may eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a failure in the future.

SMART CHOICE scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 38.09.

A below-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

How successful a credit union is at making money has an effect on its safety and soundness. A credit union can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the credit union more resilient in tough times. However, credit unions that are losing money have less ability to do those things.

SMART CHOICE received above-average marks on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

One sign that the credit union is running ahead of 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.