Safe and Sound

Union Savings and Loan Association

New Orleans, LA
5
Star Rating
New Orleans, LA-based Union Savings and Loan Association is an FDIC-insured bank founded in 1886. Regulatory filings show the bank having equity of $31.3 million on assets of $81.1 million, as of December 31, 2017.

Thanks to the work of 14 full-time employees in 2 offices in LA, the bank holds loans and leases worth $53.9 million, including real estate loans of $54.3 million. U.S. bank customers currently have $43.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Union Savings and Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is important. It works as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

Union Savings and Loan Association scored 30 out of a possible 30 points on our test to measure capital adequacy, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. Union Savings and Loan Association's Tier 1 capital ratio was 80.08 percent, exceeding the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, Union Savings and Loan Association held equity amounting to 38.60 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due loans.

A bank with extensive holdings of these kinds of assets could eventually be forced to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and elevating the chances of a future failure.

On Bankrate's asset quality test, Union Savings and Loan Association scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.95 percent of Union Savings and Loan Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Union Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Union Savings and Loan Association fell behind the national average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Union Savings and Loan Association was 0.01 percent, below the national average of 8.10 percent.

The bank earned net income of $3,000 on total equity of $31.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.00 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

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.