WHAT IS
SAFE AND SOUND?
Capital is a useful measurement of an institution's financial fortitude. It acts as a buffer against losses and provides protection for members when a credit union is struggling financially. When it comes to safety and soundness, more capital is preferred.
WORCESTER POLICE DEPARTMENT racked up 16 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, beating the national average of 15.65.
WORCESTER POLICE DEPARTMENT had a capitalization ratio of 16.00 percent in our test, equal to the average for all credit unions, suggesting that it's running neck and neck with its peers.
In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.
Having a large number of these types of assets may eventually force a credit union to use capital to absorb losses, diminishing 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, pushing down earnings and increasing the chances of a failure in the future.
WORCESTER POLICE DEPARTMENT scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 38.09.
A below-average ratio of problem assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.
A credit union's earnings performance has an effect on its long-term survivability. A credit union can retain its earnings, giving a boost to its capital cushion, or use them to deal with problematic loans, likely making the credit union better able to withstand financial shocks. Conversely, losses take away from a credit union's ability to do those things.
WORCESTER POLICE DEPARTMENT did below-average on Bankrate's earnings test, achieving a score of 4 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, better 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.