Safe and Sound

COVINGTON SCHOOLS

ANDALUSIA, AL
5
Star Rating
Started in 1957, COVINGTON SCHOOLS is an NCUA-insured credit union headquartered in ANDALUSIA, AL. Regulatory filings show the credit union having assets of $17.1 million, as of December 31, 2017.

Members have $8.1 million on deposit tended by 3 full-time employees. With that footprint, the credit union holds loans and leases worth $8.1 million. COVINGTON SCHOOLS's 1,602 members currently have $11.1 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, COVINGTON SCHOOLS exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the credit union did on the three major 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 acts as a buffer against losses and provides protection for members during periods of economic trouble for the credit union. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. When looking at safety and soundness, more capital is preferred.

COVINGTON SCHOOLS beat out the national average of 15.65 points on our test to measure the adequacy of a credit union's capital, scoring 30 out of a possible 30 points.

COVINGTON SCHOOLS's capitalization ratio of 30.00 percent in our test was above the average for all credit unions, suggesting that it could have an easier time weathering financial trouble than its peers.

Asset Quality Score

In this test, Bankrate tries to determine 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.

A credit union with extensive holdings of these kinds of assets may eventually be required to use capital to cover losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a future failure.

COVINGTON SCHOOLS scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 38.09.

The credit union's ratio of problem assets was 0.00 percent in our test, beneath the national average and suggestive 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, expanding its capital buffer, or be used to deal with problematic loans, potentially making the credit union more resilient in tough times. However, credit unions that are losing money are less able to do those things.

On Bankrate's earnings test, COVINGTON SCHOOLS scored 6 out of a possible 30, below the national average of 10.11.

COVINGTON SCHOOLS had an earnings ratio of 0.00 percent in our test, above the average for all credit unions, suggesting that it's outperforming 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.