Memorandum on findings

17612 Energy Rd
Proctor, WV 26055

STAR RATING: 3 starstarstar
Predictive Indicator + (improve)
As of March 31, 2014
Credit Union ID 11836

A credit union is a nonprofit, cooperative financial institution, owned and administered by individual members, who must meet eligibility requirements to join. Credit unions pay no federal income tax. Community development credit unions are chartered to serve the needs of low income members who reside in financially distressed or under-served communities.

The Bankrate proprietary credit union rating model analyzes capitalization, asset quality, earnings, and liquidity to produce composite and component "Star" ratings that can be used as a measure of the rated entity's financial safety and soundness. Additionally, early warning components of the model highlight operating characteristics of immediate concern and recommended follow-up actions. The analyses are not adjusted for TARP funding and those institutions receiving funds may receive ratings that would differ were the TARP funds adjusted out of the analyses. You can check whether or not this institution has received TARP funding and whether or not they have paid it back at

Institution Name BAYER HERITAGE
Report Date March 31, 2014
Report Period 3 months
Star Composite Rating, Percentile Rank 3 /33.26
Predictive Indicator + (improve)
Earnings Rating, Percentile Rank 4 /88.45
Asset Quality Rating, Percentile Rank 3 /8.36
Capital Rating, Percentile Rank 3 /60.39
Liquidity Rating, Percentile Rank 2 /18.49
Institution Asset Size 354.5894 million
Deposits 318.6632 million
Loans 264.5253 million
Equity 34.9658 million
Net Profit/Loss 1.0241 million


Component star rating: 3 starstarstar
Capital highlights

Capitalization stands as protection against loss for credit union members, creditors and, if applicable, the insurer. Regulators place a high degree of importance upon assessments of capitalization.

Key measures of Capital AdequacyRatio (%)Assessment
Net Capital / Assets 9.86Approximates Peer Norm
Capital (1) / Assets 10.51Approximates Peer Norm
(1) Includes loan loss allowance.

Component star rating: 3 starstarstar
Asset quality highlights

Asset quality is a major determinant of the viability of any banking institution. Poor asset quality will have a very direct impact upon other components and regulators invest substantial amounts of time and resources in gauging the quality of loans and investments.

Key Asset Quality information and ratios:Ratio (%)Assessment
Nonperforming Asset Ratio (2)13.15Somewhat Higher Than Standard
Loss Reserve Coverage (3)48.28Well Below Normal
Asset Growth Rate 12.02Normal
(2) Nonperforming Assets/Equity plus Loss Reserves

(3) Loan Loss reserves/Delinquent Loans

Component star rating: 4 starstarstarstar
Earnings highlights

A credit union's profitability is critical to building capital and establishing adequate loss reserves.

Key Earnings information and ratios:Ratio (%)Assessment
Return on Average Assets 1.26Substantially Better Than Normal
Overhead / Average Assets 3.41Better Than Average
Note: The earnings assessment is based on the latest four quarters of income and expense.

Component star rating: 2 starstar
Liquidity highlights

Liquidity provides funding for normal operations and represents a reserve for unanticipated disintermediation.

Key measures of Liquidity:Ratio (%)Assessment
Balance Sheet Liquidity9.35Below average

Early warning highlights

Early warning indicators identify areas of potential concern, which may lead to financial deterioration and thus, require inquiry or in depth investigation.
For this institution we have noted:

  • Overhead

Institution Commentary

OVERVIEW of Institution
BAYER HERITAGE is a federally chartered credit union, which, as of March 31, 2014, reported total assets of approximately $354.5894 million. At that date, loans and deposits held by the institution amounted to $264.5253 million and $318.6632 million, respectively. Equity, the difference between a credit union's total assets and total liabilities, was determined to have been $34.9658 million, which was 9.86% of total assets.

Bankrate believes that, as of March 31, 2014, this credit union exhibited a generally satisfactory condition, characterized by mid-range capitalization, satisfactory asset quality, normal profitability, and lower than normal liquidity.

For the one year period ended March 31, 2014, this credit union reported a very strong rate of growth in equity capital. Balance sheet structural changes, through the one year period of time ended March 31, 2014, have had little or no positive, and quite possibly a negative, impact upon the institution's capital position. Our analytical methodology does take into account the quantity, quality, durability, and direction of net worth, and, as set forth above, we have determined, based upon our series of tests, that this credit union demonstrates mid-range capitalization.

The institution reveals, as previously stated, satisfactory asset quality. That conclusion incorporates our analysis of data depicting regional economic conditions as well as our computations of a somewhat higher than standard March 31, 2014 nonperforming asset ratio and well below normal reserve coverage for nonperforming loans.

Credit card lending activities should not, based on our analysis of asset quality trends and conditions, have a substantial negative impact upon future results.

For the year ended March 31, 2014, this institution recorded a net profit of $4,321.39 thousand, which represented a return on average assets (ROA) of 1.26%. Year earlier four quarter results amounted to a net profit of $2,428,286, or a 0.80% ROA. ROA is the key measurement of profitability within the credit union industry, and the industry's ROA, for the three months ended March 31, 2014, approximated 0.78%.

We have concluded that, for the four quarters ending March 31 2014, the institution achieved a substantially better than normal return on average assets. An approximately average overhead ratio is in evidence. We have noted that the insitution's profitability performance, between the twelve months ending March 31 , 2013 and the twelve months ending March 31 , 2014 exceeded the industry peer comparison.

As of March 31, 2014, the institution displayed below average balance sheet liquidity.

Accounting principles require some securities to be categorized as "Available-for-Sale." Changes in market value of these securities are reflected through the GAAP (Generally Accepted Accounting Principles) net worth of the institution. Based upon the credit union's present balance sheet, changes in the value of the current level of securities reported as might not have a substantial impact upon future net worth of the credit union.

This credit union has been rated generally satisfactory.
Negative factors that impacted that rating follow:

  • Liquidity
As noted previously, early warning indicators possibly requiring specific investigation include:
  • Overhead

As stated, we have determined a Composite Star rating for this credit union of 3 starstarstar , indicative of a generally satisfactory financial condition. At times, conditions of financial institutions change rapidly and significantly. Hence, our Safe & Sound Star ratings should not be deemed predictive of likely future ratings. However, in view of early warning indicators set forth within this report, in combination with the institution's financial data, we believe that the Star rating for this institution is likely to improve within the ensuing twelve month period.

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