Safe and Sound

FEDERAL EMPLOYEES

BIRMINGHAM, AL
4
Star Rating
FEDERAL EMPLOYEES is a BIRMINGHAM, AL-based, NCUA-insured credit union founded in 1958. Regulatory filings show the credit union having assets of $19.5 million, as of December 31, 2017.

Members have $8.0 million on deposit tended by 5 full-time employees. With that footprint, the credit union holds loans and leases worth $8.0 million. FEDERAL EMPLOYEES's 1,533 members currently have $16.1 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, FEDERAL EMPLOYEES exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the credit union faired on the three key criteria Bankrate used to grade U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for members when a credit union is struggling financially. It follows then that a credit union's level of capital is a valuable measurement of its financial fortitude. When looking at safety and soundness, more capital is preferred.

On our test to measure capital adequacy, FEDERAL EMPLOYEES achieved a score of 24 out of a possible 30 points, better than the national average of 15.65.

FEDERAL EMPLOYEES appears to be on more solid financial footing than its peers, with a capitalization ratio of 24.00 percent in our test, better 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 past-due mortgages.

Having a large number of these kinds of assets suggests a credit union could have to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the credit union, decreasing earnings and elevating the chances of a failure in the future.

FEDERAL EMPLOYEES scored 36 out of a possible 40 points on Bankrate's asset quality test, lower than the national average of 38.09.

Troubled assets made up 0.00 percent of FEDERAL EMPLOYEES's total assets in our test, below the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

A credit union's earnings performance affects its safety and soundness. Earnings may be retained by the credit union, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the credit union better able to withstand economic shocks. Losses, on the other hand, take away from a credit union's ability to do those things.

On Bankrate's earnings test, FEDERAL EMPLOYEES scored 8 out of a possible 30, below the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, a sign that it's beating 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.