WHAT IS
SAFE AND SOUND?
When it comes to measuring an institution's financial fortitude, capital is important. It acts as a buffer against losses and provides protection for members when a credit union is struggling financially. When it comes to safety and soundness, more capital is preferred.
On our test to measure the adequacy of a credit union's capital, MCLENNAN COUNTY EMPLOYEES scored 30 out of a possible 30 points, better than the national average of 15.65.
MCLENNAN COUNTY EMPLOYEES appears to be more resilient than its peers, with a capitalization ratio of 30.00 percent in our test, higher than the average for all credit unions.
Bankrate uses this test to estimate the effect of problem assets, such as unpaid loans, on the credit union's loan loss reserves and overall capitalization.
A credit union with a large number of these types of assets may eventually be forced to use capital to absorb losses, diminishing its buffer 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, resulting in depressed earnings and potentially more risk of a future failure.
MCLENNAN COUNTY EMPLOYEES scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 38.09.
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.
A credit union's earnings performance has an effect on its safety and soundness. Earnings may be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, likely making the credit union better prepared to withstand financial shocks. Losses, on the other hand, reduce a credit union's ability to do those things.
MCLENNAN COUNTY EMPLOYEES received below-average marks on Bankrate's test of earnings, achieving a score of 6 out of a possible 30.
One indication that the credit union is beating its peers in this area was its earnings ratio of 0.00 percent in our test, better 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.