Safe and Sound

WEST ORANGE MUNICIPAL

West Orange, NJ
2
Star Rating
Founded in 1955, WEST ORANGE MUNICIPAL is an NCUA-insured credit union headquartered in West Orange, NJ. As of December 31, 2017, the credit union held assets of $7.0 million.

Thanks to the efforts of 3 full-time employees, the credit union holds loans and leases worth $3.9 million. Its 1,215 members currently have $6.4 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, WEST ORANGE MUNICIPAL exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's an analysis of how the credit union did on the three major criteria Bankrate used to grade American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for members when a credit union is struggling financially. It follows then that an institution's level of capital is a crucial measurement of its financial strength. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, WEST ORANGE MUNICIPAL received a score of 6 out of a possible 30 points, coming in below the national average of 15.65.

WEST ORANGE MUNICIPAL appears to be on less solid financial footing than its peers in this area, with a capitalization ratio of 6.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid mortgages, on the credit union's loan loss reserves and overall capitalization.

A credit union with large numbers of these types of assets could eventually be required to use capital to absorb losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a failure in the future.

WEST ORANGE MUNICIPAL scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 38.09.

A lower-than-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

A credit union's ability to earn money has an effect on its safety and soundness. A credit union can retain its earnings, giving a boost to its capital buffer, or use them to deal with problematic loans, likely making the credit union better prepared to withstand financial shocks. Losses, on the other hand, reduce a credit union's ability to do those things.

WEST ORANGE MUNICIPAL scored 0 out of a possible 30 on Bankrate's earnings test, below the national average of 10.11.

One sign that the credit union is beating its peers in this area was its earnings ratio of 0.00 percent in our test, higher than 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.