WHAT IS
SAFE AND SOUND?
Capital works as a buffer against losses and as protection for members when a credit union is experiencing economic instability. Therefore, an institution's level of capital is an important measurement of its financial resilience. When looking at safety and soundness, the more capital, the better.
On our test to measure capital adequacy, ERIE POLICE achieved a score of 30 out of a possible 30 points, exceeding the national average of 15.65.
ERIE POLICE appears to be more well prepared for financial trouble than its peers, with a capitalization ratio of 30.00 percent in our test, better than the average for all credit unions.
This test's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due mortgages.
A credit union with extensive holdings of these kinds of assets could eventually be forced 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, resulting in reduced earnings and potentially more risk of a failure in the future.
On Bankrate's asset quality test, ERIE POLICE scored 40 out of a possible 40 points, exceeding the national average of 38.09 points.
A credit union's ability to earn money affects its long-term survivability. A credit union can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the credit union more resilient in times of trouble. Conversely, losses reduce a credit union's ability to do those things.
ERIE POLICE scored 4 out of a possible 30 on Bankrate's test of earnings, less than the national average of 10.11.
One sign that ERIE POLICE is beating its peers in this area was its earnings ratio of 0.00 percent in our test, above 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.