WHAT IS
SAFE AND SOUND?
Capital works as a bulwark against losses and provides protection for members during times of economic instability for the credit union. Therefore, when it comes to measuring an an institution's financial resilience, capital is valuable. When looking at safety and soundness, the higher the capital, the better.
COMMUNITY received a score of 12 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, lower than the national average of 15.65.
COMMUNITY appears to be weaker than its peers in this area, with a capitalization ratio of 12.00 percent in our test, lower than the average for all credit unions.
In this test, Bankrate tries to determine the effect of problem assets, such as unpaid mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.
A credit union with large numbers of these types of assets could eventually be forced to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.
COMMUNITY scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 38.09.
Troubled assets made up 0.00 percent of COMMUNITY's total assets in our test, less than the national average and potentially indicative of superior financial strength compared to other credit unions.
A credit union's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the credit union, increasing its capital cushion, or be used to deal with problematic loans, potentially making the credit union more resilient in tough times. However, credit unions that are losing money have less ability to do those things.
On Bankrate's earnings test, COMMUNITY scored 8 out of a possible 30, failing to reach the national average of 10.11.
One indication that COMMUNITY 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.