Safe and Sound

STATE DEPARTMENT

ALEXANDRIA, VA
4
Star Rating
STATE DEPARTMENT is an ALEXANDRIA, VA-based, NCUA-insured credit union started in 1935. Regulatory filings show the credit union having $1.84 billion in assets, as of June 30, 2017.

With 201 full-time employees, the credit union has amassed loans and leases worth $960.7 million. STATE DEPARTMENT's 77,814 members currently have $1.52 billion in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, STATE DEPARTMENT exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the credit union did on the three important criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for members when a credit union is struggling financially. It follows then that when it comes to measuring an an institution's financial stability, capital is essential. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, STATE DEPARTMENT received a score of 10 out of a possible 30 points, coming in below the national average of 15.26.

STATE DEPARTMENT appears to be less well prepared for financial trouble 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

In this test, Bankrate tries to estimate the effect of problem assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.

Having extensive holdings of these kinds of assets means a credit union could have to use capital to absorb 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 thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

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

A below-average ratio of problem assets of 2.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at earning money has an effect on its safety and soundness. A credit union can retain its earnings, giving a boost to its capital buffer, 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.

STATE DEPARTMENT beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

STATE DEPARTMENT had an earnings ratio of 8.00 percent in our test, better than the average for all credit unions, a sign 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.