WHAT IS
SAFE AND SOUND?
Capital works as a bulwark against losses and provides protection for members during times of financial trouble for the credit union. Therefore, an institution's level of capital is a crucial measurement of its financial resilience. From a safety and soundness perspective, the higher the capital, the better.
SKYWARD scored above the national average of 15.65 points on our test to measure the adequacy of a credit union's capital, scoring 24 out of a possible 30 points.
SKYWARD appears to be on more solid financial footing than its peers, with a capitalization ratio of 24.00 percent in our test, higher than the average for all credit unions.
In this test, Bankrate tries to estimate the effect of problem assets, such as past-due loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.
Having large numbers of these kinds of assets means a credit union could eventually have to use capital to absorb losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a failure in the future.
SKYWARD scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 38.09.
The credit union's ratio of troubled assets was 0.00 percent in our test, lower than the national average and suggestive of greater financial strength than other credit unions.
How successful a credit union is at making money affects its safety and soundness. Earnings may be retained by the credit union, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the credit union more resilient in times of trouble. Credit unions that are losing money, however, have less ability to do those things.
SKYWARD outperformed the average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.
One sign that SKYWARD is beating its peers in this area was its earnings ratio of 0.00 percent in our test, above 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.