WHAT IS
SAFE AND SOUND?
Capital acts as a cushion against losses and as protection for members when a credit union is struggling financially. Therefore, an institution's level of capital is a crucial measurement of its financial fortitude. When looking at safety and soundness, the more capital, the better.
HOUSTON came in below the national average of 15.65 on our test to measure capital adequacy, receiving a score of 8 out of a possible 30 points.
HOUSTON appears to be weaker than its peers in this area, with a capitalization ratio of 8.00 percent in our test, lower than the average for all credit unions.
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 unpaid loans.
A credit union with lots of these kinds of assets may eventually be forced 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 no longer earning interest for the credit union, decreasing earnings and elevating the risk of a future failure.
HOUSTON scored 40 out of a possible 40 points on Bankrate's test of asset quality, better than the national average of 38.09.
Troubled assets made up 0.00 percent of HOUSTON's total assets in our test, below the national average and suggestive of greater financial strength than other credit unions.
How successful a credit union is at making money affects its safety and soundness. Earnings may be retained by the credit union, expanding its capital cushion, or be used to address problematic loans, likely making the credit union better able to withstand financial shocks. Losses, on the other hand, take away from a credit union's ability to do those things.
On Bankrate's earnings test, HOUSTON scored 18 out of a possible 30, beating out 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.