Weiss Credit Union Ratings
Credit Union ratings are safety ratings based on a complex analysis of hundreds of factors that are synthesized into five indexes: capitalization, asset quality, profitability, liquidity and stability.
A weak score on any one index can result in a low rating, as financial problems can be caused by any one of a number of factors, such as inadequate capital, non-performing loans and poor asset quality, operating losses, poor liquidity, or the failure of an affiliated company. Below are the five indexes.
Our Capitalization Index gauges the institution’s capital adequacy in terms of its cushion to absorb future operating losses under adverse business and economic scenarios that may impact the company’s net interest margin, securities’ values, and the collectability of its loans.
Our Asset Quality Index measures the quality of the company’s past underwriting and investment practices, based on the estimated liquidation value of the company’s loan and securities portfolios.
Our Profitability Index measures the soundness of the company's operations and the contribution of profits to the company's financial strength. The index is a composite of five sub-factors: 1) gain or loss on operations; 2) rates of return on assets and equity; 3) management of net interest margin; 4) generation of noninterest-based revenues; and 5) overhead expense management.
Our Liquidity Index evaluates a company's ability to raise the necessary cash to satisfy creditors and honor depositor withdrawals.
Our Stability Index integrates a number of sub-factors that affect consistency (or lack thereof) in maintaining financial strength over time. These include 1) risk diversification in terms of company size and loan diversification; 2) deterioration of operations as reported in critical asset, liability, income and expense items, such as an increase in loan delinquency rates or a sharp increase in loan originations; 3) years in operation; 4) former problem areas where, despite recent improvement, the company has yet to establish a record of stable performance over a suitable period of time; and 5) relationships with holding companies and affiliates.
In order to help guarantee our objectivity, we reserve the right to publish ratings expressing our opinion of a company's financial stability based exclusively on publicly available data and our own proprietary standards for safety.
Credit Union Rating Definitions:
A Excellent. This institution offers excellent financial security. It has maintained a conservative stance in its business operations and underwriting practices as evidenced by its strong equity base, high asset quality, steady earnings, and high liquidity. While the financial position of any company is subject to change, we believe that this institution has the resources necessary to deal with severe economic conditions.
B Good. This institution offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria, and is likely to/ remain healthy for the near future. Nevertheless, in the event of a severe recession or major financial crisis, we feel that this assessment should be reviewed to make sure that the company is still maintaining adequate financial strength.by its strong equity base, high asset quality, steady earnings, and high liquidity. While the financial position of any company is subject to change, we believe that this institution has the resources necessary to deal with severe economic conditions
C Fair. This is a cautionary or yellow flag. In the event of a recession or major financial crisis, we feel this company may encounter difficulties in maintaining its financial stability.
D Weak. This institution currently demonstrates what we believe to be significant weaknesses that could negatively impact depositors or creditors. In the event of a severe recession or major financial crisis, these weaknesses could be magnified.
E Very Weak. This institution currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests that we use to identify financial stability. Therefore, even in a favorable economic environment, it is our opinion that depositors or creditors could incur significant risks.
F Failed. This institution has been placed under the custodianship of regulatory authorities, implying that it will be either liquidated or taken over by another financial institution.
+ The plus sign is an indication that the institution is in the upper third of the letter grade.
- The minus sign is an indication that the institution is in the lower third of the letter grade.
U Unrated. This institution is unrated due to the absence of sufficient data for our ratings.