Honolulu Fire Department Federal Credit Union one of Three Hawaii credit unions among nation’s least likely to fail

Apr 22, 2015

Ingram Publishing Jason Ubay  Reporter- Pacific Business News

Three Hawaii credit unions were among the 50 healthiest in the United States, according to an analysis by Sageworks Bank Information.

Kahului Federal Credit Union, Honolulu Fire Department Federal Credit Union and Hawaii Schools Federal Credit Union are among the top 50 healthiest credit unions and are less likely to fail, according to a study by Sageworks Bank Information, a web-based data platform that includes data on all U.S. banks and credit unions.

The study looked at financial data from the fourth quarter of 2014 for 6,000 credit unions across the country and calculated their Texas Ratios, an indicator of a financial institution’s health.

The Texas Ratio is determined by dividing the credit union’s nonperforming assets by the sum of its total net worth and loan loss reserve. Generally speaking, a high ratio means an institution has credit quality issues and a high risk of failure, while a low ratio is an indicator of a healthy institution. A ratio between 0.5-1.0 is a warning sign, while greater than 1.0 indicates a bank or credit union could fail.

Among Hawaii credit unions, Kahului FCU on Maui ranked seventh overall with a Texas Ratio of 0.000032 on $56.56 million in assets. Next highest was Honolulu Fire Department FCU, which had a Texas Ratio of 0.001292 on $64.1 million in assets, followed by Hawaii Schools FCU, which had a Texas Ratio of 0.001493 on $67.06 million in assets.

The study did not include financial institutions that carried no loans on their latest call reports, nor did it include credit unions under $50 million in total assets.

“Considering that credit unions have a more stringent cut-off than banks for non-performing loans, it’s impressive that each of these institutions has been able to keep asset quality so high,” said James Noe, an analyst at Sageworks, in a statement. “Each credit union highlighted on the top 50 list has a Texas Ratio of less than 0.003, which indicates a very healthy institution. We’ll continue to monitor the trend overall, but it seems like along with banks, credit unions are seeing solid health overall.”