WHAT IS
SAFE AND SOUND?
Capital acts as a bulwark against losses and provides protection for members when a credit union is struggling financially. Therefore, when it comes to measuring an a credit union's financial stability, capital is crucial. From a safety and soundness perspective, more capital is preferred.
On our test to measure capital adequacy, I R E B achieved a score of 18 out of a possible 30 points, exceeding the national average of 15.65.
I R E B's capitalization ratio of 18.00 percent in our test was better than the average for all credit unions, suggesting that it's stronger than its peers.
This test is intended 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.
A credit union with lots of these kinds of assets could eventually be required to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a future failure.
I R E B exceeded 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 greater financial strength than other credit unions.
A credit union's earnings performance has an effect on its long-term survivability. Earnings may be retained by the credit union, boosting its capital buffer, or be used to address problematic loans, potentially making the credit union better able to withstand economic trouble. Conversely, losses take away from a credit union's ability to do those things.
I R E B did below-average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.
One indication that the credit union is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, higher than the average for all credit unions.
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.