Safe and Sound

POTOMAC

Cumberland, MD
4
Star Rating
POTOMAC is an NCUA-insured credit union started in 1954 and currently based in Cumberland, MD. Regulatory filings show the credit union having assets of $23.5 million, as of December 31, 2017.

With 10 full-time employees, the credit union holds loans and leases worth $18.9 million. POTOMAC's 2,859 members currently have $19.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, POTOMAC exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the credit union faired on the three important criteria Bankrate used to evaluate U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a credit union's financial strength. It acts as a bulwark against losses and as protection for members during periods of economic instability for the credit union. When looking at safety and soundness, the higher the capital, the better.

POTOMAC achieved a score of 22 out of a possible 30 points on our test to measure capital adequacy, exceeding the national average of 15.65.

POTOMAC's capitalization ratio of 22.00 percent in our test was above the average for all credit unions, a sign that it's on more solid financial footing than its peers.

Asset Quality Score

This test is intended to estimate how the credit union's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

A credit union with lots of these kinds of assets could eventually be required to use capital to absorb losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, pushing down earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, POTOMAC scored 40 out of a possible 40 points, beating the national average of 38.09 points.

Earnings score

A credit union's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the credit union, increasing its capital cushion, or be used to deal with problematic loans, potentially making the credit union better prepared to withstand economic trouble. However, credit unions that are losing money are less able to do those things.

POTOMAC received below-average marks on Bankrate's earnings test, achieving a score of 4 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 doing better than 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.