WHAT IS
SAFE AND SOUND?
Capital works as a bulwark against losses and as protection for members when a credit union is experiencing financial trouble. Therefore, an institution's level of capital is a key measurement of its financial fortitude. When looking at safety and soundness, more capital is preferred.
CALHOUN-LIBERTY EMPLOYEES achieved a score of 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.
CALHOUN-LIBERTY EMPLOYEES's capitalization ratio of 16.00 percent in our test puts it right in line with the average for all credit unions.
This test's purpose is to try to understand how the credit union's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.
A credit union with large numbers of these types of assets could eventually have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.
CALHOUN-LIBERTY EMPLOYEES did better than the national average of 38.09 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .
The credit union's ratio of troubled assets was 0.00 percent in our test, lower than the national average and potentially indicative of greater financial strength than other credit unions.
A credit union's profitability affects its safety and soundness. Earnings may be retained by the credit union, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the credit union more resilient in times of trouble. Conversely, losses diminish a credit union's ability to do those things.
On Bankrate's test of earnings, CALHOUN-LIBERTY EMPLOYEES scored 18 out of a possible 30, better than the national average of 10.11.
The credit union had an earnings ratio of 0.00 percent in our test, higher than the average for all credit unions, a sign that it's running ahead of its peers in this area.
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.