WHAT IS
SAFE AND SOUND?
When it comes to measuring a credit union's financial resilience, capital is useful. It acts as a buffer against losses and as protection for members when a credit union is struggling financially. When looking at safety and soundness, more capital is preferred.
On our test to measure capital adequacy, PEOPLES TRANSPORT received a score of 12 out of a possible 30 points, coming in below the national average of 15.65.
PEOPLES TRANSPORT's capitalization ratio of 12.00 percent in our test was worse than the average for all credit unions, a sign that it could have a harder time weathering financial trouble than its peers.
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 problem assets, such as past-due loans.
A credit union with extensive holdings of these kinds of assets may eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.
PEOPLES TRANSPORT fell short of the national average of 38.09 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .
PEOPLES TRANSPORT's ratio of problem assets was 0.00 percent in our test, less than the national average and suggestive of superior financial strength compared to other credit unions.
How successful a credit union is at earning money affects its safety and soundness. A credit union can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the credit union better able to withstand economic trouble. Conversely, losses reduce a credit union's ability to do those things.
On Bankrate's test of earnings, PEOPLES TRANSPORT scored 10 out of a possible 30, lower than 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, a sign that it's beating 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.