Safe and Sound

DAKOTA STAR

RAPID CITY, SD
4
Star Rating
DAKOTA STAR is a RAPID CITY, SD-based, NCUA-insured credit union dating back to 1952. As of December 31, 2017, the credit union had assets of $24.1 million.

With 10 full-time employees, the credit union has amassed loans and leases worth $20.8 million. DAKOTA STAR's 3,016 members currently have $21.6 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DAKOTA STAR exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired 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 acts as a cushion against losses and as protection for members during times of economic instability for the credit union. It follows then that when it comes to measuring an a credit union's financial fortitude, capital is important. When looking at safety and soundness, the more capital, the better.

DAKOTA STAR received a score of 12 out of a possible 30 points on our test to measure capital adequacy, below the national average of 15.65.

DAKOTA STAR's capitalization ratio of 12.00 percent in our test was worse than the average for all credit unions, suggesting that it's less well prepared for financial trouble than its peers.

Asset Quality Score

This test is intended to try to understand how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having large numbers of these kinds of assets suggests a credit union could have to use capital to absorb losses, cutting down on 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, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, DAKOTA STAR scored 36 out of a possible 40 points, below the national average of 38.09 points.

The credit union's ratio of troubled assets was 0.00 percent in our test, below the national average and suggestive 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, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the credit union better able to withstand financial shocks. However, credit unions that are losing money are less able to do those things.

DAKOTA STAR scored 8 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 10.11.

DAKOTA STAR had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, suggesting that it's running ahead of 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.