WHAT IS
SAFE AND SOUND?
Capital acts as a bulwark against losses and provides protection for members during periods of financial instability for the credit union. Therefore, an institution's level of capital is a key measurement of its financial fortitude. When it comes to safety and soundness, the higher the capital, the better.
NORFOLK COMMUNITY came in below the national average of 15.65 on our test to measure capital adequacy, scoring 12 out of a possible 30 points.
NORFOLK COMMUNITY's capitalization ratio of 12.00 percent in our test was worse than the average for all credit unions, a sign that it's weaker than its peers.
This test's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid loans.
A credit union with lots of these kinds of assets may eventually be forced to use capital to cover losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a failure in the future.
NORFOLK COMMUNITY scored above the national average of 38.09 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .
NORFOLK COMMUNITY's ratio of problem assets was 0.00 percent in our test, lower than the national average and suggestive of superior financial strength compared to other credit unions.
A credit union's profitability affects its safety and soundness. Earnings may be retained by the credit union, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the credit union better able to withstand financial shocks. Credit unions that are losing money, however, are less able to do those things.
NORFOLK COMMUNITY scored 16 out of a possible 30 on Bankrate's test of earnings, better than the national average of 10.11.
One sign that NORFOLK COMMUNITY is running ahead of 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.