Safe and Sound

SECTION 705

Lafayette, LA
2
Star Rating
SECTION 705 is a Lafayette, LA-based, NCUA-insured credit union that opened its doors in 1968. As of December 31, 2017, the credit union had assets of $32.2 million.

Thanks to the work of 9 full-time employees, the credit union currently holds loans and leases worth $24.1 million. Its 3,572 members currently have $28.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, SECTION 705 exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three key criteria Bankrate used to evaluate U.S. 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 when a credit union is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial fortitude, capital is useful. When it comes to safety and soundness, the more capital, the better.

SECTION 705 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.

SECTION 705's capitalization ratio of 12.00 percent in our test was lower than the average for all credit unions, suggesting that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with extensive holdings of these kinds of assets could eventually be forced to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, SECTION 705 scored 36 out of a possible 40 points, below the national average of 38.09 points.

The credit union's ratio of troubled assets was 0.00 percent in our test, beneath the national average and suggestive of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at earning money has an effect on its long-term survivability. Earnings can be retained by the credit union, boosting its capital buffer, or be used to deal with problematic loans, potentially making the credit union better able to withstand financial shocks. Losses, on the other hand, lessen a credit union's ability to do those things.

SECTION 705 scored 0 out of a possible 30 on Bankrate's earnings test, falling short of 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, suggesting that it's outperforming 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.