WHAT IS
SAFE AND SOUND?
When it comes to measuring an institution's financial fortitude, capital is essential. It acts as a cushion against losses and affords protection for members when a credit union is struggling financially. From a safety and soundness perspective, more capital is better.
CITY OF FAIRMONT fell short of the national average of 15.65 on our test to measure capital adequacy, achieving a score of 12 out of a possible 30 points.
CITY OF FAIRMONT's capitalization ratio of 12.00 percent in our test was worse than the average for all credit unions, an indication that it could have a harder time weathering financial trouble than its peers.
This test's purpose is to estimate how the credit union's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.
A credit union with lots of these kinds of assets could eventually be forced to use capital to cover losses, cutting down on its equity buffer. 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, reducing earnings and increasing the chances of a failure in the future.
CITY OF FAIRMONT exceeded the national average of 38.09 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .
A below-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.
A credit union's earnings performance affects its safety and soundness. Earnings may be retained by the credit union, expanding its capital buffer, or be used to deal with problematic loans, potentially making the credit union more resilient in tough times. Losses, on the other hand, reduce a credit union's ability to do those things.
On Bankrate's test of earnings, CITY OF FAIRMONT scored 8 out of a possible 30, falling short of the national average of 10.11.
One indication that CITY OF FAIRMONT 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.