Safe and Sound

PALACE CITY

Mitchell, SD
4
Star Rating
PALACE CITY is an NCUA-insured credit union founded in 1959 and currently based in Mitchell, SD. As of December 31, 2017, the credit union held assets of $11.5 million.

With 3 full-time employees, the credit union holds loans and leases worth $4.0 million. Its 1,702 members currently have $10.1 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, PALACE CITY exhibited a good condition, earning 4 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 grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial strength, capital is important. It works as a cushion against losses and as protection for members when a credit union is struggling financially. When looking at safety and soundness, more capital is better.

PALACE CITY came in below the national average of 15.65 on our test to measure capital adequacy, racking up 14 out of a possible 30 points.

PALACE CITY 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, below the average for all credit unions.

Asset Quality Score

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

Having extensive holdings of these types of assets may eventually force a credit union to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in diminished earnings and potentially more risk of a future failure.

PALACE CITY scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 38.09.

Earnings score

How successful a credit union is at earning money has an effect on its safety and soundness. Earnings may be retained by the credit union, expanding its capital cushion, or be used to address problematic loans, potentially making the credit union better able to withstand financial trouble. Conversely, losses diminish a credit union's ability to do those things.

PALACE CITY underperformed the average on Bankrate's test of earnings, achieving a score of 2 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, an indication that it's running ahead of 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.