Safe and Sound

COMMONWEALTH CENTRAL

SAN JOSE, CA
4
Star Rating
SAN JOSE, CA-based COMMONWEALTH CENTRAL is an NCUA-insured credit union founded in 1958. As of June 30, 2017, the credit union had assets of $498.0 million.

Members have $339.7 million on deposit tended by 92 full-time employees. With that footprint, the credit union holds loans and leases worth $339.7 million. Its 36,703 members currently have $447.2 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, COMMONWEALTH CENTRAL exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the credit union did on the three important criteria Bankrate used to score American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial stability, capital is crucial. It acts as a buffer against losses and as protection for members when a credit union is struggling financially. When looking at safety and soundness, the more capital, the better.

On our test to measure the adequacy of a credit union's capital, COMMONWEALTH CENTRAL received a score of 10 out of a possible 30 points, falling short of the national average of 15.26.

COMMONWEALTH CENTRAL appears to be weaker than its peers in this area, with a capitalization ratio of 9.00 percent in our test, below the average for all credit unions.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with extensive holdings of these kinds of assets could eventually be forced to use capital to cover losses, cutting down on 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 lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, COMMONWEALTH CENTRAL scored 40 out of a possible 40 points, above the national average of 38.15 points.

A lower-than-average ratio of problem assets of 3.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

A credit union's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the credit union, boosting its capital buffer, or be used to address problematic loans, likely making the credit union better prepared to withstand economic shocks. Conversely, losses diminish a credit union's ability to do those things.

COMMONWEALTH CENTRAL scored 10 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 10.31.

COMMONWEALTH CENTRAL had an earnings ratio of 5.00 percent in our test, better than the average for all credit unions, suggesting that it's doing better than 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.