Safe and Sound

FREDERIKSTED

FREDERIKSTED, VI
2
Star Rating
FREDERIKSTED, VI-based FREDERIKSTED is an NCUA-insured credit union started in 1952. The credit union holds assets of $13.8 million, according to December 31, 2017, regulatory filings.

Members have $4.7 million on deposit tended by 7 full-time employees. With that footprint, the credit union has amassed loans and leases worth $4.7 million. Its 2,950 members currently have $12.2 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FREDERIKSTED exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three major criteria Bankrate used to grade American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for members when a credit union is struggling financially. It follows then that an institution's level of capital is a key measurement of its financial fortitude. From a safety and soundness perspective, more capital is preferred.

FREDERIKSTED scored below the national average of 15.65 on our test to measure capital adequacy, achieving a score of 14 out of a possible 30 points.

FREDERIKSTED appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 14.00 percent in our test, less than the average for all credit unions.

Asset Quality Score

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

Having lots of these kinds of assets may eventually require a credit union to use capital to cover losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a failure in the future.

On Bankrate's test of asset quality, FREDERIKSTED scored 24 out of a possible 40 points, lower than the national average of 38.09 points.

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

Earnings score

How successful a credit union is at making money affects its safety and soundness. A credit union can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the credit union better able to withstand economic shocks. Conversely, losses diminish a credit union's ability to do those things.

On Bankrate's earnings test, FREDERIKSTED scored 0 out of a possible 30, below the national average of 10.11.

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 outperforming 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.