Safe and Sound

LOUCHEM

LOUISVILLE, KY
2
Star Rating
LOUCHEM is an NCUA-insured credit union started in 1968 and currently based in LOUISVILLE, KY. The credit union holds assets of $24.4 million, according to December 31, 2017, regulatory filings.

With 9 full-time employees, the credit union holds loans and leases worth $18.3 million. Its 4,923 members currently have $21.9 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, LOUCHEM exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a look at how the credit union faired on the three major criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an institution's financial strength, capital is important. It works as a buffer against losses and affords protection for members when a credit union is struggling financially. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, LOUCHEM received a score of 10 out of a possible 30 points, below the national average of 15.65.

LOUCHEM had a capitalization ratio of 10.00 percent in our test, below the average for all credit unions, suggesting that it's less well prepared for financial trouble than its peers.

Asset Quality Score

This test is intended 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 unpaid loans.

A credit union with extensive holdings of these types of assets could eventually be forced to use capital to cover losses, shrinking 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 diminished earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, LOUCHEM scored 36 out of a possible 40 points, failing to reach the national average of 38.09 points.

A lower-than-average ratio of problem assets of 0.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at making money affects its long-term survivability. Earnings can be retained by the credit union, expanding its capital buffer, or be used to deal with problematic loans, likely making the credit union more resilient in tough times. However, credit unions that are losing money are less able to do those things.

On Bankrate's test of earnings, LOUCHEM scored 0 out of a possible 30, failing to reach the national average of 10.11.

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