Safe and Sound

SOUTHERN

Chattanooga, TN
4
Star Rating
SOUTHERN is an NCUA-insured credit union founded in 1933 and currently based in Chattanooga, TN. As of December 31, 2017, the credit union held assets of $22.0 million.

With 8 full-time employees, the credit union has amassed loans and leases worth $9.9 million. SOUTHERN's 2,594 members currently have $19.0 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, SOUTHERN exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the credit union did on the three important criteria Bankrate used to score American credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for members when a credit union is experiencing economic trouble. It follows then that an institution's level of capital is an important measurement of its financial strength. When it comes to safety and soundness, the higher the capital, the better.

SOUTHERN racked up 18 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 15.65.

SOUTHERN appears to be stronger than its peers, with a capitalization ratio of 18.00 percent in our test, better than the average for all credit unions.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as past-due 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 have to use capital to absorb losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a future failure.

On Bankrate's test of asset quality, SOUTHERN scored 40 out of a possible 40 points, exceeding the national average of 38.09 points.

Troubled assets made up 0.00 percent of SOUTHERN's total assets in our test, beneath the national average and potentially indicative of greater financial strength than other credit unions.

Earnings score

How successful a credit union is at making money has an effect on its long-term survivability. A credit union can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the credit union more resilient in times of trouble. Conversely, losses diminish a credit union's ability to do those things.

SOUTHERN scored 4 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 10.11.

One indication that SOUTHERN is outperforming its peers in this area was its earnings ratio of 0.00 percent in our test, higher than the average for all credit unions.

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.