Safe and Sound

SMART FINANCIAL

Houston, TX
4
Star Rating
SMART FINANCIAL is a Houston, TX-based, NCUA-insured credit union that opened its doors in 1934. As of December 31, 2017, the credit union held assets of $700.1 million.

Thanks to the efforts of 233 full-time employees, the credit union holds loans and leases worth $406.1 million. SMART FINANCIAL's 77,603 members currently have $628.3 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, SMART FINANCIAL exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union faired on the three key criteria Bankrate used to evaluate American credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for members when a credit union is struggling financially. It follows then that when it comes to measuring an a credit union's financial resilience, capital is essential. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, SMART FINANCIAL received a score of 6 out of a possible 30 points, below the national average of 15.65.

SMART FINANCIAL's capitalization ratio of 6.00 percent in our test was lower than the average for all credit unions, an indication that it's less well prepared for financial trouble than its peers.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.

Having a large number of these kinds of assets means a credit union could eventually have to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in diminished earnings and potentially more risk of a future failure.

SMART FINANCIAL scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 38.09.

A below-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at making money has an effect on its long-term survivability. 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. Losses, on the other hand, reduce a credit union's ability to do those things.

SMART FINANCIAL received below-average marks on Bankrate's earnings test, achieving a score of 10 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, higher than the average for all credit unions.

WHAT IS SAFE & SOUND?

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.

Scoring methodology

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.