Safe and Sound

FEDTRUST

MEMPHIS, TN
2
Star Rating
Founded in 1959, FEDTRUST is an NCUA-insured credit union headquartered in MEMPHIS, TN. Regulatory filings show the credit union having assets of $36.9 million, as of December 31, 2017.

With 13 full-time employees, the credit union has amassed loans and leases worth $28.4 million. Its 4,501 members currently have $33.6 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FEDTRUST exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired on the three key criteria Bankrate used to evaluate U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for members during times of financial trouble for the credit union. Therefore, an institution's level of capital is a crucial measurement of its financial resilience. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a credit union's capital, FEDTRUST received a score of 6 out of a possible 30 points, failing to reach the national average of 15.65.

FEDTRUST appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 6.00 percent in our test, less than the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the credit union's loan loss reserves and overall capitalization.

A credit union with large numbers of these types of assets may eventually be forced to use capital to cover losses, diminishing 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 failure in the future.

On Bankrate's asset quality test, FEDTRUST scored 28 out of a possible 40 points, less than the national average of 38.09 points.

A below-average ratio of problem assets of 0.00 percent in our test was potentially indicative of greater financial strength than 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 buffer, or put them to work addressing problematic loans, potentially making the credit union more resilient in tough times. Credit unions that are losing money, however, have less ability to do those things.

FEDTRUST did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

The credit union had an earnings ratio of 0.00 percent in our test, higher than the average for all credit unions, suggesting that it's beating 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.