Safe and Sound

LUFKIN

LUFKIN, TX
5
Star Rating
LUFKIN is a LUFKIN, TX-based, NCUA-insured credit union started in 1964. As of June 30, 2017, the credit union had assets of $33.4 million.

Thanks to the work of 10 full-time employees, the credit union has amassed loans and leases worth $17.7 million. LUFKIN's 4,304 members currently have $26.0 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, LUFKIN exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three important criteria Bankrate used to grade American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for members during periods of economic instability for the credit union. Therefore, when it comes to measuring an an institution's financial stability, capital is important. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, LUFKIN racked up 30 out of a possible 30 points, beating out the national average of 15.26.

LUFKIN appears to be stronger than its peers, with a capitalization ratio of 22.00 percent in our test, better than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets may eventually require a credit union to use capital to cover losses, diminishing its equity buffer. 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 depressed earnings and potentially more risk of a future failure.

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

A below-average ratio of problem assets of 1.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

A credit union's earnings performance affects its safety and soundness. Earnings may be retained by the credit union, increasing its capital cushion, or be used to deal with problematic loans, potentially making the credit union better able to withstand economic shocks. Credit unions that are losing money, however, have less ability to do those things.

LUFKIN did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

LUFKIN had an earnings ratio of 3.00 percent in our test, above the average for all credit unions, suggesting that it's doing better than its peers in this area.

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.