WHAT IS
SAFE AND SOUND?
Capital works as a bulwark against losses and affords protection for members when a credit union is struggling financially. It follows then that when it comes to measuring an a credit union's financial stability, capital is valuable. When looking at safety and soundness, the more capital, the better.
On our test to measure capital adequacy, SAN JUAN received a score of 12 out of a possible 30 points, failing to reach the national average of 15.65.
SAN JUAN's capitalization ratio of 12.00 percent in our test was less than the average for all credit unions, suggesting that it could be less resilient in a crisis than its peers.
This test's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due loans.
Having lots of these kinds of assets may eventually require a credit union to use capital to cover losses, shrinking its buffer 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, resulting in diminished earnings and potentially more risk of a failure in the future.
SAN JUAN scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 38.09.
Troubled assets made up 0.00 percent of SAN JUAN's total assets in our test, less than the national average and potentially indicative of superior financial strength compared to other credit unions.
How successful a credit union is at earning money has an effect on its long-term survivability. Earnings can be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, likely making the credit union better prepared to withstand financial shocks. Obviously, credit unions that are losing money have less ability to do those things.
SAN JUAN exceeded the national average on Bankrate's test of earnings, achieving a score of 30 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, higher than the average for all credit unions.
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.
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.