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America’s healthiest credit unions by Texas Ratio
List ranks top 50 credit unions by key performance indicator
RALEIGH, NC (April 21, 2015) — Based on an analysis of data from more than 6,000 credit unions across the country, Sageworks Bank Information, a web-based data platform that includes data on all U.S. banks and credit unions, identified the healthiest credit unions in the United States by their Texas Ratios. A high Texas Ratio is an indicator that a credit union may have credit quality issues and a higher risk of failure, while a low Texas Ratio is an indicator of a healthy institution. The list ranks the 50 credit unions in the U.S. with the lowest Texas Ratios. Six credit unions share the top spot in the ranking, all with a Texas Ratio of zero – California Lithuanian Credit Union in Santa Monica; Lassen County Federal Credit Union in Susanville, Calif.; Nasconga Federal Credit Union in Gainesville, Tex.; SMW 104 Federal Credit Union in San Leandro, Calif.; Vision One Credit Union in Sacramento, Calif.; and White Crown Federal Credit Union in Denver, Colo. The dataset used the most recent federal data via Sageworks Bank Information for the fourth quarter ended Dec. 31, 2014.
Texas Ratio is a key performance indicator in the banking industry, used to assess an individual credit union’s health as it relates to credit quality. The ratio gauges a financial institution’s ability to cover its bad debts with its total capital and allowances. The Texas Ratio is determined by first dividing the credit union’s Non-Performing Assets (sum of Loans Delinquent 60+ Days, Total Foreclosed and Repossessed Assets) by the sum of Total Net Worth and Loan Loss Reserve (ALLL). The Texas Ratio for a credit union differs slightly from that of a bank, in that a credit union considers a loan delinquent after 60 days of nonpayment rather than 90 days of nonpayment. Generally, across all financial institutions, a Texas Ratio between 0.5 – 1.0 is a warning sign, and a ratio greater than 1.0 indicates that the bank or credit union is potentially in danger of failure.
“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. “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.”
California is the best represented state on the Top 50 list, with 12 credit unions making the ranking, including four of the six No. 1-ranked institutions. The state is home to 200 credit unions with more than $50 million in total assets. The state also ranked well for healthy banks. In a recent list of America’s healthiest banks by Texas Ratio, compiled by Sageworks Bank Information, California dominated the Western U.S., with 12 banks carrying a zero Texas Ratio.
The dataset was researched through Sageworks Bank Information, a web-based data platform that includes data on all U.S. banks and credit unions. All 6,000+ credit unions in the U.S. were evaluated for the list. All financial institutions that did not carry loans in their most recent call report were eliminated from the list. Credit unions under $50 million in total assets were also removed from consideration. The healthiest credit unions were identified by their individual Texas Ratio (represented with up to six decimal places for differentiation, when necessary), and then ranked by lowest to highest ratio. Those top six credit unions with a Texas Ratio of zero are listed alphabetically.
For more information on Sageworks Bank Information or to sign up for a free trial, visit bankinfo.sageworks.com.
The largest credit union by asset size to make the ranking is Austin Telco Federal Credit Union, ranked 33rd; the Texas-based institution holds more than $1.3 billion in assets, with more than $500 million in total loans. Only 19 of the top 50 credit unions listed hold more than $100 million in total assets.