Safe and Sound

HFS

HILO, HI
4
Star Rating
HILO, HI-based HFS is an NCUA-insured credit union founded in 1937. The credit union has assets of $546.3 million, according to December 31, 2017, regulatory filings.

With 114 full-time employees, the credit union has amassed loans and leases worth $202.9 million. Its 49,387 members currently have $486.8 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, HFS exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three important criteria Bankrate used to evaluate American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer 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 strength, capital is valuable. When looking at safety and soundness, more capital is better.

HFS received a score of 12 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, less than the national average of 15.65.

HFS had a capitalization ratio of 12.00 percent in our test, less than the average for all credit unions, an indication that it's weaker than its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the credit union's loan loss reserves and overall capitalization.

Having a large number of these kinds of assets may eventually force a credit union to use capital to absorb losses, decreasing 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 interest for the credit union, diminishing earnings and elevating the risk of a failure in the future.

HFS scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 38.09.

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

Earnings score

A credit union's ability to earn money has an effect on its long-term survivability. Earnings can be retained by the credit union, increasing its capital buffer, or be used to address problematic loans, likely making the credit union better able to withstand economic shocks. Conversely, losses lessen a credit union's ability to do those things.

On Bankrate's earnings test, HFS scored 12 out of a possible 30, above the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, an indication that it's beating its peers in this area.

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.