Safe and Sound

HOME TOWN

OWATONNA, MN
4
Star Rating
OWATONNA, MN-based HOME TOWN is an NCUA-insured credit union founded in 1974. Regulatory filings show the credit union having assets of $136.4 million, as of December 31, 2017.

With 41 full-time employees, the credit union currently holds loans and leases worth $116.7 million. HOME TOWN's 17,371 members currently have $120.5 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, HOME TOWN exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the credit union did on the three key criteria Bankrate used to evaluate American credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for members during periods of financial trouble for the credit union. Therefore, when it comes to measuring an an institution's financial stability, capital is crucial. When it comes to safety and soundness, the higher the capital, the better.

HOME TOWN 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.

HOME TOWN appears to be weaker than its peers in this area, with a capitalization ratio of 12.00 percent in our test, less than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid loans, on the credit union's capitalization and allocated loan loss reserves.

Having large numbers of these types of assets means a credit union may eventually have to use capital to absorb losses, diminishing 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, resulting in depressed earnings and potentially more risk of a future failure.

HOME TOWN did better than the national average of 38.09 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

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 earnings performance has an effect on its safety and soundness. A credit union can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the credit union better prepared to withstand financial shocks. Credit unions that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, HOME TOWN scored 16 out of a possible 30, better than the national average of 10.11.

HOME TOWN had an earnings ratio of 0.00 percent in our test, above the average for all credit unions, suggesting 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.