Safe and Sound

HERITAGE COMMUNITY

RANCHO CORDOVA, CA
3
Star Rating
HERITAGE COMMUNITY is a RANCHO CORDOVA, CA-based, NCUA-insured credit union founded in 1953. The credit union holds $201.8 million in assets, according to June 30, 2017, regulatory filings.

Members have $165.7 million on deposit tended by 40 full-time employees. With that footprint, the credit union currently holds loans and leases worth $165.7 million. HERITAGE COMMUNITY's 13,290 members currently have $176.7 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, HERITAGE COMMUNITY exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a breakdown of how the credit union did on the three key criteria Bankrate used to grade U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial fortitude, capital is useful. It works as a buffer against losses and as protection for members when a credit union is experiencing financial instability. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a credit union's capital, HERITAGE COMMUNITY received a score of 10 out of a possible 30 points, less than the national average of 15.26.

HERITAGE COMMUNITY appears to be weaker than its peers in this area, with a capitalization ratio of 9.00 percent in our test, less than the average for all credit unions.

Asset Quality Score

This test is intended to estimate how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due loans.

Having large numbers of these kinds of assets means a credit union may have to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the risk of a future failure.

HERITAGE COMMUNITY scored below the national average of 38.15 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A higher-than-average ratio of troubled assets of 9.00 percent in our test was something to watch for the credit union.

Earnings score

A credit union's profitability has an effect on its long-term survivability. Earnings can be retained by the credit union, increasing its capital buffer, or be used to deal with problematic loans, potentially making the credit union better prepared to withstand financial trouble. Credit unions that are losing money, however, are less able to do those things.

On Bankrate's earnings test, HERITAGE COMMUNITY scored 8 out of a possible 30, lower than the national average of 10.31.

HERITAGE COMMUNITY had an earnings ratio of 4.00 percent in our test, above the average for all credit unions, an indication that it's doing better than 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.