Safe and Sound

HONOR

Berrien Springs, MI
5
Star Rating
Berrien Springs, MI-based HONOR is an NCUA-insured credit union founded in 1934. The credit union has $761.1 million in assets, according to June 30, 2017, regulatory filings.

With 264 full-time employees, the credit union holds loans and leases worth $587.4 million. Its 67,875 members currently have $623.6 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, HONOR exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired on the three key criteria Bankrate used to score U.S. credit unions on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial stability, capital is key. It works as a cushion against losses and provides protection for members when a credit union is struggling financially. When it comes to safety and soundness, the more capital, the better.

HONOR received a score of 14 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 15.26.

HONOR appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 11.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

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

Having extensive holdings of these kinds of assets means a credit union may have to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in depressed earnings and potentially more risk of a future failure.

HONOR scored above the national average of 38.15 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

Troubled assets made up 4.00 percent of HONOR's total assets in our test, below the national average and potentially indicative of greater financial strength than other credit unions.

Earnings score

A credit union's ability to earn money affects its safety and soundness. Earnings may be retained by the credit union, expanding its capital buffer, or be used to deal with problematic loans, potentially making the credit union more resilient in times of trouble. Credit unions that are losing money, however, are less able to do those things.

HONOR did above-average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

One sign that the credit union is outperforming its peers in this area was its earnings ratio of 11.00 percent in our test, better 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.