Safe and Sound

LA FINANCIAL

PASADENA, CA
3
Star Rating
Started in 1937, LA FINANCIAL is an NCUA-insured credit union based in PASADENA, CA. The credit union holds $386.3 million in assets, according to June 30, 2017, regulatory filings.

Members have $255.8 million on deposit tended by 79 full-time employees. With that footprint, the credit union holds loans and leases worth $255.8 million. LA FINANCIAL's 31,533 members currently have $348.6 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, LA FINANCIAL exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union faired on the three major criteria Bankrate used to score U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

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 a valuable measurement of its financial resilience. From a safety and soundness perspective, the higher the capital, the better.

LA FINANCIAL fell short of the national average of 15.26 on our test to measure the adequacy of a credit union's capital, racking up 6 out of a possible 30 points.

LA FINANCIAL appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 8.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

This test's purpose is to estimate how the credit union's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

A credit union with large numbers of these types of assets may eventually be forced to use capital to cover losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, LA FINANCIAL scored 40 out of a possible 40 points, better than the national average of 38.15 points.

The credit union's ratio of troubled assets was 1.00 percent in our test, below the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

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, potentially making the credit union better prepared to withstand economic trouble. Losses, on the other hand, reduce a credit union's ability to do those things.

LA FINANCIAL fell behind the national average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One sign that LA FINANCIAL is outperforming its peers in this area was its earnings ratio of 2.00 percent in our test, above 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.