Safe and Sound

STATE FARM

Bloomington, IL
5
Star Rating
STATE FARM is a Bloomington, IL-based, NCUA-insured credit union started in 1936. The credit union has $4.04 billion in assets, according to June 30, 2017, regulatory filings.

Members have $924.5 million on deposit tended by 176 full-time employees. With that footprint, the credit union currently holds loans and leases worth $924.5 million. STATE FARM's 130,598 members currently have $3.50 billion in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, STATE FARM exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the credit union faired on the three key criteria Bankrate used to score U.S. credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for members when a credit union is struggling financially. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. When looking at safety and soundness, the more capital, the better.

STATE FARM exceeded the national average of 15.26 points on our test to measure the adequacy of a credit union's capital, receiving a score of 18 out of a possible 30 points.

STATE FARM had a capitalization ratio of 13.00 percent in our test, identical the average for all credit unions, a sign that it's right in line with its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as unpaid mortgages, on the credit union's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets suggests a credit union could have to use capital to absorb losses, diminishing its cushion of equity. 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, pushing down earnings and increasing the risk of a failure in the future.

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

A lower-than-average ratio of problem assets of 1.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money affects its safety and soundness. A credit union can retain its earnings, increasing its capital buffer, or use them to address problematic loans, potentially making the credit union more resilient in tough times. However, credit unions that are losing money have less ability to do those things.

On Bankrate's earnings test, STATE FARM scored 12 out of a possible 30, above the national average of 10.31.

One indication that STATE FARM is beating its peers in this area was its earnings ratio of 5.00 percent in our test, higher than 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.