Safe and Sound

L&N EMPLOYEES

BIRMINGHAM, AL
4
Star Rating
L&N EMPLOYEES is a BIRMINGHAM, AL-based, NCUA-insured credit union founded in 1952. The credit union holds $9.2 million in assets, according to December 31, 2017, regulatory filings.

Members have $6.6 million on deposit tended by 3 full-time employees. With that footprint, the credit union has amassed loans and leases worth $6.6 million. Its 1,453 members currently have $6.7 million in shares with the credit union.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for members during times of financial trouble for the credit union. It follows then that an institution's level of capital is a useful measurement of its financial fortitude. From a safety and soundness perspective, more capital is better.

L&N EMPLOYEES scored above the national average of 15.65 points on our test to measure capital adequacy, scoring 22 out of a possible 30 points.

L&N EMPLOYEES's capitalization ratio of 22.00 percent in our test was higher than the average for all credit unions, an indication that it's on more solid financial footing than its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as past-due mortgages, on the credit union's capitalization and allocated loan loss reserves.

Having lots of these kinds of assets could eventually require a credit union to use capital to absorb losses, shrinking 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, resulting in reduced earnings and potentially more risk of a future failure.

L&N EMPLOYEES scored below the national average of 38.09 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A below-average ratio of troubled assets of 0.00 percent in our test was potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money affects its safety and soundness. A credit union can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, potentially making the credit union better able to withstand financial trouble. Conversely, losses reduce a credit union's ability to do those things.

On Bankrate's earnings test, L&N EMPLOYEES scored 2 out of a possible 30, lower than the national average of 10.11.

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