Safe and Sound

FIRST COMMONWEALTH

Lehigh Valley, PA
5
Star Rating
Started in 1959, FIRST COMMONWEALTH is an NCUA-insured credit union based in Lehigh Valley, PA. As of December 31, 2017, the credit union held assets of $681.5 million.

Members have $482.3 million on deposit tended by 157 full-time employees. With that footprint, the credit union currently holds loans and leases worth $482.3 million. Its 57,741 members currently have $602.1 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FIRST COMMONWEALTH exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the credit union did on the three key criteria Bankrate used to evaluate American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial fortitude, capital is useful. It acts as a cushion against losses and provides protection for members during periods of financial instability for the credit union. When it comes to safety and soundness, the higher the capital, the better.

FIRST COMMONWEALTH received a score of 12 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, failing to reach the national average of 15.65.

FIRST COMMONWEALTH's capitalization ratio of 12.00 percent in our test was worse than the average for all credit unions, a sign that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.

A credit union with large numbers of these types of assets may eventually be forced 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 money, resulting in diminished earnings and potentially more risk of a future failure.

FIRST COMMONWEALTH 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, less than the national average and potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's earnings performance affects its safety and soundness. Earnings may be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, potentially making the credit union better prepared to withstand economic shocks. Credit unions that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, FIRST COMMONWEALTH scored 18 out of a possible 30, better than the national average of 10.11.

One indication that the credit union is beating its peers in this area was its earnings ratio of 0.00 percent in our test, better than 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.