Safe and Sound

FEDSTAR

COLLEGE STATION, TX
4
Star Rating
Started in 1961, FEDSTAR is an NCUA-insured credit union based in COLLEGE STATION, TX. As of December 31, 2017, the credit union held assets of $26.3 million.

Members have $12.2 million on deposit tended by 4 full-time employees. With that footprint, the credit union holds loans and leases worth $12.2 million. FEDSTAR's 2,234 members currently have $23.2 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FEDSTAR exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the credit union faired on the three major criteria Bankrate used to grade American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial strength. It acts as a cushion against losses and provides protection for members when a credit union is struggling financially. From a safety and soundness perspective, the more capital, the better.

On our test to measure the adequacy of a credit union's capital, FEDSTAR received a score of 14 out of a possible 30 points, lower than the national average of 15.65.

FEDSTAR had a capitalization ratio of 14.00 percent in our test, lower than the average for all credit unions, an indication that it's on less solid financial footing than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with extensive holdings of these kinds of assets could eventually be required to use capital to cover losses, decreasing its equity cushion. 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 lower earnings and potentially more risk of a failure in the future.

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

The credit union's ratio of troubled assets was 0.00 percent in our test, beneath the national average and suggestive of greater financial strength than other credit unions.

Earnings score

A credit union's ability to earn money has an effect on its long-term survivability. Earnings can be retained by the credit union, expanding its capital buffer, or be used to deal with problematic loans, likely making the credit union better able to withstand financial trouble. However, credit unions that are losing money have less ability to do those things.

On Bankrate's earnings test, FEDSTAR scored 4 out of a possible 30, falling short of the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, above the average for all credit unions, a sign that it's doing better than 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.