Safe and Sound

FIVE STAR

Dothan, AL
5
Star Rating
Started in 1964, FIVE STAR is an NCUA-insured credit union headquartered in Dothan, AL. As of December 31, 2017, the credit union had assets of $383.5 million.

With 103 full-time employees, the credit union has amassed loans and leases worth $246.1 million. FIVE STAR's 39,028 members currently have $333.3 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FIVE STAR 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 key criteria Bankrate used to evaluate U.S. 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 stability, capital is essential. It works as a bulwark against losses and provides protection for members when a credit union is struggling financially. When looking at safety and soundness, more capital is better.

FIVE STAR scored below the national average of 15.65 on our test to measure the adequacy of a credit union's capital, racking up 12 out of a possible 30 points.

FIVE STAR had a capitalization ratio of 12.00 percent in our test, worse than the average for all credit unions, an indication that it's weaker than its peers.

Asset Quality Score

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

Having a large number of these types of assets may eventually force a credit union to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and increasing the chances of a failure in the future.

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

A lower-than-average ratio of troubled 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 earning money has an effect on its safety and soundness. Earnings can be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, potentially making the credit union more resilient in times of trouble. Credit unions that are losing money, however, have less ability to do those things.

FIVE STAR exceeded the national average on Bankrate's earnings test, achieving a score of 22 out of a possible 30.

One sign that the credit union is outperforming 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.