Safe and Sound

ALABAMA CENTRAL

BIRMINGHAM, AL
2
Star Rating
Founded in 1938, ALABAMA CENTRAL is an NCUA-insured credit union headquartered in BIRMINGHAM, AL. As of December 31, 2017, the credit union had assets of $135.8 million.

Members have $114.2 million on deposit tended by 57 full-time employees. With that footprint, the credit union has amassed loans and leases worth $114.2 million. Its 18,014 members currently have $123.0 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, ALABAMA CENTRAL exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a look at how the credit union faired on the three important criteria Bankrate used to evaluate American credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for members during times of economic instability for the credit union. It follows then that when it comes to measuring an an institution's financial stability, capital is valuable. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, ALABAMA CENTRAL received a score of 8 out of a possible 30 points, falling short of the national average of 15.65.

ALABAMA CENTRAL 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, less than the average for all credit unions.

Asset Quality Score

This test's purpose is to estimate how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid mortgages.

Having extensive holdings of these kinds of assets may eventually force a credit union to use capital to absorb 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 interest for the credit union, resulting in depressed earnings and potentially more risk of a future failure.

ALABAMA CENTRAL scored 28 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 38.09.

The credit union's ratio of problem assets was 0.00 percent in our test, lower than the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at earning money affects its long-term survivability. A credit union can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the credit union better prepared to withstand economic trouble. However, credit unions that are losing money are less able to do those things.

ALABAMA CENTRAL did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One sign that the credit union is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, higher than 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.