WHAT IS
SAFE AND SOUND?
Capital works as a cushion against losses and affords protection for members when a credit union is experiencing economic trouble. It follows then that a credit union's level of capital is an important measurement of its financial resilience. When looking at safety and soundness, the higher the capital, the better.
TENNESSEE EMPLOYEES scored 30 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, beating the national average of 15.65.
TENNESSEE EMPLOYEES had a capitalization ratio of 30.00 percent in our test, better than the average for all credit unions, an indication that it could have an easier time weathering financial trouble than its peers.
This test's purpose is 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 a large number of these kinds of assets may eventually be forced to use capital to absorb losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, resulting in lower earnings and potentially more risk of a failure in the future.
TENNESSEE EMPLOYEES scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 38.09.
Troubled assets made up 0.00 percent of TENNESSEE EMPLOYEES's total assets in our test, less than the national average and potentially indicative of superior financial strength compared to other credit unions.
How successful a credit union is at making money affects its long-term survivability. A credit union can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the credit union better able to withstand economic trouble. Credit unions that are losing money, however, are less able to do those things.
TENNESSEE EMPLOYEES scored 4 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 10.11.
One indication that the credit union is outperforming 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.