Safe and Sound

NORSTATE

MADAWASKA, ME
4
Star Rating
NORSTATE is a MADAWASKA, ME-based, NCUA-insured credit union started in 1941. Regulatory filings show the credit union having $184.9 million in assets, as of December 31, 2017.

With 64 full-time employees, the credit union has amassed loans and leases worth $153.4 million. Its 14,060 members currently have $150.6 million in shares with the credit union.

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

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial strength, capital is key. It works as a buffer against losses and affords protection for members when a credit union is struggling financially. From a safety and soundness perspective, the higher the capital, the better.

NORSTATE received a score of 14 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 15.65.

NORSTATE's capitalization ratio of 14.00 percent in our test was lower than the average for all credit unions, suggesting that it could be less resilient in a crisis than its peers.

Asset Quality Score

This test is intended to try to understand how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having extensive holdings of these kinds of assets could eventually force a credit union to use capital to absorb losses, reducing 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, decreasing earnings and elevating the risk of a future failure.

NORSTATE fell below the national average of 38.09 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

Troubled assets made up 0.00 percent of NORSTATE's total assets in our test, lower than the national average and potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money affects its long-term survivability. A credit union can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the credit union more resilient in times of trouble. However, credit unions that are losing money are less able to do those things.

NORSTATE scored 10 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 10.11.

NORSTATE had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, a sign 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.