WHAT IS
SAFE AND SOUND?
Capital acts as a cushion against losses and affords protection for members when a credit union is experiencing economic trouble. Therefore, when it comes to measuring an an institution's financial stability, capital is useful. From a safety and soundness perspective, the more capital, the better.
On our test to measure the adequacy of a credit union's capital, HEARTLAND received a score of 10 out of a possible 30 points, less than the national average of 15.65.
HEARTLAND appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 10.00 percent in our test, below the average for all credit unions.
This test's purpose is to try to understand how the credit union's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.
A credit union with a large number of these types of assets could eventually be required to use capital to absorb losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, diminishing earnings and elevating the chances of a future failure.
HEARTLAND scored 28 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 38.09.
A below-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.
How successful a credit union is at making money has an effect on its long-term survivability. Earnings can be retained by the credit union, boosting its capital cushion, or be used to deal with problematic loans, likely making the credit union more resilient in times of trouble. Obviously, credit unions that are losing money have less ability to do those things.
HEARTLAND scored 14 out of a possible 30 on Bankrate's test of earnings, beating 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, suggesting 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.