WHAT IS
SAFE AND SOUND?
Capital is a useful measurement of a credit union's financial strength. It works as a cushion against losses and as protection for members when a credit union is experiencing economic trouble. When it comes to safety and soundness, the more capital, the better.
LOS ANGELES received a score of 14 out of a possible 30 points on our test to measure capital adequacy, coming in below the national average of 15.65.
LOS ANGELES's capitalization ratio of 14.00 percent in our test was below the average for all credit unions, an indication that it's weaker than its peers.
In this test, Bankrate tries to estimate the impact of problem assets, such as past-due mortgages, on the credit union's loan loss reserves and overall capitalization.
Having lots of these kinds of assets suggests a credit union may eventually have to use capital to cover losses, reducing 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 interest for the credit union, resulting in reduced earnings and potentially more risk of a future failure.
On Bankrate's test of asset quality, LOS ANGELES scored 40 out of a possible 40 points, above the national average of 38.09 points.
LOS ANGELES's ratio of problem assets was 0.00 percent in our test, lower than the national average and suggestive of superior financial strength compared to other credit unions.
How successful a credit union is at earning money has an effect on its long-term survivability. Earnings may be retained by the credit union, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the credit union more resilient in times of trouble. Conversely, losses reduce a credit union's ability to do those things.
LOS ANGELES scored 10 out of a possible 30 on Bankrate's test of earnings, less than the national average of 10.11.
LOS ANGELES had an earnings ratio of 0.00 percent in our test, better than the average for all credit unions, an indication that it's outperforming its peers in this area.
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.