WHAT IS
SAFE AND SOUND?
When it comes to measuring an institution's financial stability, capital is useful. It acts as a cushion against losses and affords protection for members during times of financial trouble for the credit union. When looking at safety and soundness, the higher the capital, the better.
HEALTHCARE SYSTEMS fell short of the national average of 15.65 on our test to measure capital adequacy, racking up 8 out of a possible 30 points.
HEALTHCARE SYSTEMS appears to be on less solid financial footing than its peers in this area, with a capitalization ratio of 8.00 percent in our test, lower than the average for all credit unions.
In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.
Having extensive holdings of these kinds of assets suggests a credit union may have to use capital to cover losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.
On Bankrate's test of asset quality, HEALTHCARE SYSTEMS scored 40 out of a possible 40 points, better than the national average of 38.09 points.
The credit union's ratio of problem assets was 0.00 percent in our test, less than the national average and potentially indicative of superior financial strength compared to other credit unions.
A credit union's earnings performance has an effect on its safety and soundness. A credit union can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, likely making the credit union better prepared to withstand economic shocks. However, credit unions that are losing money are less able to do those things.
HEALTHCARE SYSTEMS scored 16 out of a possible 30 on Bankrate's test of earnings, better than the national average of 10.11.
One sign that HEALTHCARE SYSTEMS is running ahead of 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.