Safe and Sound

VAREX

SALT LAKE CITY, UT
4
Star Rating
SALT LAKE CITY, UT-based VAREX is an NCUA-insured credit union founded in 1967. The credit union holds assets of $14.6 million, according to December 31, 2017, regulatory filings.

With 4 full-time employees, the credit union currently holds loans and leases worth $7.6 million. Its 1,317 members currently have $12.0 million in shares with the credit union.

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

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial resilience, capital is useful. It acts as a buffer against losses and provides protection for members when a credit union is experiencing economic trouble. When looking at safety and soundness, the more capital, the better.

VAREX racked up 26 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, above the national average of 15.65.

VAREX had a capitalization ratio of 26.00 percent in our test, higher than the average for all credit unions, an indication 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 unpaid loans.

A credit union with large numbers of these types of assets may eventually be required to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

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

A below-average ratio of problem assets of 0.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money affects 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 times of trouble. However, credit unions that are losing money have less ability to do those things.

VAREX scored 2 out of a possible 30 on Bankrate's earnings test, lower than the national average of 10.11.

One sign that VAREX is running ahead of its peers in this area was its earnings ratio of 0.00 percent in our test, above the average for all credit unions.

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.