Safe and Sound

HOMETOWN

Shenandoah, IA
4
Star Rating
HOMETOWN is a Shenandoah, IA-based, NCUA-insured credit union dating back to 1978. Regulatory filings show the credit union having assets of $2.4 million, as of December 31, 2017.

The credit union has amassed loans and leases worth $1.8 million. HOMETOWN's 765 members currently have $1.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, HOMETOWN exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union faired 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 bulwark against losses and affords protection for members when a credit union is struggling financially. It follows then that when it comes to measuring an a credit union's financial stability, capital is valuable. From a safety and soundness perspective, more capital is preferred.

On our test to measure the adequacy of a credit union's capital, HOMETOWN achieved a score of 30 out of a possible 30 points, exceeding the national average of 15.65.

HOMETOWN appears to be more well prepared for financial trouble than its peers, with a capitalization ratio of 30.00 percent in our test, above the average for all credit unions.

Asset Quality Score

This test's purpose is to try to understand how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having a large number of these kinds of assets may eventually require a credit union to use capital to cover losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, HOMETOWN scored 28 out of a possible 40 points, failing to reach the national average of 38.09 points.

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

Earnings score

How successful a credit union is at making money affects its safety and soundness. Earnings may be retained by the credit union, increasing its capital buffer, or be used to address problematic loans, likely making the credit union more resilient in tough times. Obviously, credit unions that are losing money have less ability to do those things.

HOMETOWN scored 8 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 10.11.

One indication that HOMETOWN is doing better than its peers in this area was its earnings ratio of 0.00 percent in our test, higher than 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.