Safe and Sound

LUSO

Ludlow, MA
4
Star Rating
LUSO is an NCUA-insured credit union started in 1971 and currently based in Ludlow, MA. As of December 31, 2017, the credit union had assets of $218.4 million.

With 33 full-time employees, the credit union has amassed loans and leases worth $190.4 million. LUSO's 7,944 members currently have $182.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, LUSO exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three major criteria Bankrate used to score American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for members during periods of financial trouble for the credit union. It follows then that when it comes to measuring an an institution's financial fortitude, capital is useful. When looking at safety and soundness, the higher the capital, the better.

LUSO received a score of 12 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, failing to reach the national average of 15.65.

LUSO appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 12.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with a large number of these types of assets may eventually be required to use capital to cover losses, diminishing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

On Bankrate's test of asset quality, LUSO scored 40 out of a possible 40 points, exceeding 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 safety and soundness. A credit union can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the credit union better able to withstand financial shocks. Losses, on the other hand, reduce a credit union's ability to do those things.

LUSO did above-average on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.

LUSO had an earnings ratio of 0.00 percent in our test, higher than the average for all credit unions, an indication 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.