Safe and Sound

DIRECT

Needham, MA
5
Star Rating
Needham, MA-based DIRECT is an NCUA-insured credit union founded in 1953. As of December 31, 2017, the credit union had assets of $606.8 million.

With 59 full-time employees, the credit union has amassed loans and leases worth $547.1 million. DIRECT's 27,977 members currently have $406.0 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DIRECT 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 important criteria Bankrate used to score American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for members during periods of financial trouble for the credit union. Therefore, when it comes to measuring an a credit union's financial strength, capital is useful. When looking at safety and soundness, more capital is preferred.

On our test to measure capital adequacy, DIRECT scored 18 out of a possible 30 points, exceeding the national average of 15.65.

DIRECT's capitalization ratio of 18.00 percent in our test was above the average for all credit unions, a sign that it could have an easier time weathering financial trouble than its peers.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as unpaid mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets may eventually require a credit union to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, pushing down earnings and elevating the risk of a future failure.

DIRECT beat out the national average of 38.09 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A below-average ratio of problem assets of 0.00 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 making money has an effect on its safety and soundness. Earnings may be retained by the credit union, expanding its capital cushion, or be used to deal with problematic loans, potentially making the credit union better able to withstand economic trouble. Obviously, credit unions that are losing money have less ability to do those things.

On Bankrate's earnings test, DIRECT scored 12 out of a possible 30, beating out 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, above 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.