Safe and Sound

ECO

BIRMINGHAM, AL
4
Star Rating
BIRMINGHAM, AL-based ECO is an NCUA-insured credit union started in 1979. The credit union has $138.3 million in assets, according to December 31, 2017, regulatory filings.

With 38 full-time employees, the credit union has amassed loans and leases worth $62.3 million. ECO's 15,999 members currently have $125.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, ECO exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three major criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial strength, capital is key. It works as a bulwark against losses and affords protection for members during times of economic instability for the credit union. When looking at safety and soundness, the higher the capital, the better.

ECO received a score of 8 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 15.65.

ECO 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, below the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as unpaid loans, on the credit union's capitalization and allocated loan loss reserves.

A credit union with large numbers of these kinds of assets may eventually have to use capital to absorb losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, resulting in reduced earnings and potentially more risk of a failure in the future.

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

ECO's ratio of troubled assets was 0.00 percent in our test, below the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

A credit union's ability to earn money affects its long-term survivability. Earnings may be retained by the credit union, increasing its capital cushion, or be used to deal with problematic loans, likely making the credit union better able to withstand financial trouble. Obviously, credit unions that are losing money are less able to do those things.

ECO received below-average marks on Bankrate's test of earnings, achieving a score of 10 out of a possible 30.

One indication that ECO is doing better than its peers in this area was its earnings ratio of 0.00 percent in our test, better 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.