Safe and Sound

HSM

HICKORY, NC
2
Star Rating
Started in 1977, HSM is an NCUA-insured credit union based in HICKORY, NC. As of December 31, 2017, the credit union held assets of $4.6 million.

With 3 full-time employees, the credit union holds loans and leases worth $3.2 million. Its 2,087 members currently have $3.9 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, HSM exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three key criteria Bankrate used to evaluate U.S. 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 as protection for members during times of economic trouble for the credit union. Therefore, when it comes to measuring an a credit union's financial fortitude, capital is crucial. When looking at safety and soundness, the more capital, the better.

HSM received a score of 10 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 15.65.

HSM appears to be on less solid financial footing than its peers in this area, with a capitalization ratio of 10.00 percent in our test, lower than the average for all credit unions.

Asset Quality Score

This test is intended to try to understand how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due loans.

A credit union with extensive holdings of these kinds of assets may eventually have to use capital to absorb losses, cutting down on its cushion 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 chances of a future failure.

HSM scored 36 out of a possible 40 points on Bankrate's asset quality test, lower than the national average of 38.09.

Troubled assets made up 0.00 percent of HSM's total assets in our test, less than the national average and 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. A credit union can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the credit union more resilient in tough times. Obviously, credit unions that are losing money have less ability to do those things.

On Bankrate's earnings test, HSM scored 0 out of a possible 30, coming in below the national average of 10.11.

One sign that the credit union 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.