WHAT IS
SAFE AND SOUND?
Capital acts as a buffer against losses and affords protection for members when a credit union is struggling financially. Therefore, a credit union's level of capital is a crucial measurement of its financial fortitude. From a safety and soundness perspective, the more capital, the better.
On our test to measure the adequacy of a credit union's capital, LONG BEACH TEACHERS scored 30 out of a possible 30 points, exceeding the national average of 15.65.
LONG BEACH TEACHERS's capitalization ratio of 30.00 percent in our test was higher than the average for all credit unions, suggesting that it's more well prepared for financial trouble than its peers.
In this test, Bankrate tries to determine the effect of problem assets, such as unpaid loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.
Having extensive holdings of these kinds of assets could eventually require a credit union to use capital to cover losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a failure in the future.
On Bankrate's test of asset quality, LONG BEACH TEACHERS scored 40 out of a possible 40 points, beating the national average of 38.09 points.
Troubled assets made up 0.00 percent of LONG BEACH TEACHERS's total assets in our test, less than the national average and suggestive of superior financial strength compared to other credit unions.
How successful a credit union is at making money affects its safety and soundness. A credit union can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the credit union better able to withstand economic trouble. Conversely, losses lessen a credit union's ability to do those things.
LONG BEACH TEACHERS received below-average marks on Bankrate's earnings test, achieving a score of 2 out of a possible 30.
One sign that LONG BEACH TEACHERS is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, better than the average for all credit unions.
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.
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.