Safe and Sound

SARCO

BETHLEHEM, PA
4
Star Rating
BETHLEHEM, PA-based SARCO is an NCUA-insured credit union founded in 1936. Regulatory filings show the credit union having assets of $7.1 million, as of December 31, 2017.

SARCO's 678 members currently have $5.5 million in shares with the credit union. With that footprint, the credit union has amassed loans and leases worth $4.9 million.

Overall, Bankrate believes that, as of December 31, 2017, SARCO exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union faired on the three key criteria Bankrate used to score U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for members when a credit union is struggling financially. Therefore, when it comes to measuring an a credit union's financial fortitude, capital is useful. When looking at safety and soundness, the more capital, the better.

SARCO scored above the national average of 15.65 points on our test to measure the adequacy of a credit union's capital, racking up 30 out of a possible 30 points.

SARCO's capitalization ratio of 30.00 percent in our test was above the average for all credit unions, suggesting that it's more well prepared for financial trouble than its peers.

Asset Quality Score

This test's purpose is to try to understand 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 unpaid loans.

A credit union with large numbers of these kinds of assets could eventually be required to use capital to cover losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a future failure.

On Bankrate's test of asset quality, SARCO scored 28 out of a possible 40 points, below the national average of 38.09 points.

A lower-than-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at earning money has an effect on its safety and soundness. A credit union can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the credit union more resilient in tough times. Losses, on the other hand, lessen a credit union's ability to do those things.

On Bankrate's earnings test, SARCO scored 6 out of a possible 30, falling short of the national average of 10.11.

SARCO had an earnings ratio of 0.00 percent in our test, better 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.