Safe and Sound

HEMA

SILVER SPRING, MD
3
Star Rating
SILVER SPRING, MD-based HEMA is an NCUA-insured credit union started in 1969. The credit union has assets of $15.2 million, according to December 31, 2017, regulatory filings.

Members have $4.9 million on deposit tended by 2 full-time employees. With that footprint, the credit union currently holds loans and leases worth $4.9 million. Its 2,295 members currently have $13.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, HEMA exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three major criteria Bankrate used to grade American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for members during times of financial instability for the credit union. Therefore, a credit union's level of capital is a useful measurement of its financial resilience. When it comes to safety and soundness, the more capital, the better.

HEMA received a score of 10 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 15.65.

HEMA's capitalization ratio of 10.00 percent in our test was lower than the average for all credit unions, an indication that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

This test is intended to estimate how the credit union's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having extensive holdings of these types of assets may eventually force a credit union to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the credit union, diminishing earnings and increasing the risk of a future failure.

HEMA scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 38.09.

A lower-than-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at earning money affects its long-term survivability. A credit union can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the credit union more resilient in tough times. Conversely, losses lessen a credit union's ability to do those things.

HEMA scored 6 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 10.11.

One sign that HEMA 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.

WHAT IS SAFE & SOUND?

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.

Scoring methodology

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.