WHAT IS
SAFE AND SOUND?
Capital works as a cushion against losses and affords protection for members when a credit union is experiencing economic instability. Therefore, an institution's level of capital is an essential measurement of its financial fortitude. When it comes to safety and soundness, more capital is preferred.
A & S scored above the national average of 15.65 points on our test to measure the adequacy of a credit union's capital, racking up 16 out of a possible 30 points.
A & S's capitalization ratio of 16.00 percent in our test puts it right in line with the average for all credit unions.
In this test, Bankrate tries to estimate the impact of problem assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.
Having a large number of these kinds of assets could eventually force a credit union to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.
On Bankrate's asset quality test, A & S scored 40 out of a possible 40 points, beating out the national average of 38.09 points.
The credit union's ratio of problem assets was 0.00 percent in our test, below the national average and suggestive of superior financial strength compared to other credit unions.
A credit union's ability to earn money has an effect on its safety and soundness. A credit union can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the credit union better able to withstand economic shocks. Losses, on the other hand, reduce a credit union's ability to do those things.
On Bankrate's test of earnings, A & S scored 8 out of a possible 30, below the national average of 10.11.
One sign that the credit union is beating its peers in this area was its earnings ratio of 0.00 percent in our test, higher than the average for all credit unions.
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.
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.