Safe and Sound

SCHOOLSFIRST

SANTA ANA, CA
4
Star Rating
SANTA ANA, CA-based SCHOOLSFIRST is an NCUA-insured credit union founded in 1934. The credit union has $13.87 billion in assets, according to June 30, 2017, regulatory filings.

With 1,494 full-time employees, the credit union currently holds loans and leases worth $6.94 billion. SCHOOLSFIRST's 759,177 members currently have $11.90 billion in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, SCHOOLSFIRST exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three key criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

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

SCHOOLSFIRST finished below the national average of 15.26 on our test to measure the adequacy of a credit union's capital, scoring 12 out of a possible 30 points.

SCHOOLSFIRST appears to be on less solid financial footing than its peers in this area, with a capitalization ratio of 11.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to determine the impact of troubled assets, such as past-due loans, on the credit union's loan loss reserves and overall capitalization.

A credit union with a large number of these kinds of assets could eventually be required to use capital to cover losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the credit union, resulting in depressed earnings and potentially more risk of a failure in the future.

SCHOOLSFIRST scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 38.15.

A below-average ratio of troubled assets of 2.00 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. Earnings can be retained by the credit union, expanding its capital cushion, or be used to deal with problematic loans, likely making the credit union more resilient in times of trouble. Losses, on the other hand, take away from a credit union's ability to do those things.

On Bankrate's earnings test, SCHOOLSFIRST scored 16 out of a possible 30, beating out the national average of 10.31.

The credit union had an earnings ratio of 7.00 percent in our test, higher 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.