BAKERSFIELD, Calif. (8/10/11)--Kerns Schools FCU (KSFCU) in Bakersfield, Calif., reached a 6.53% capital ratio as of June 30, passing the 6% goal set by federal regulators in the summer of 2009. The credit union’s improved financial health is mainly due to reducing costs. The goal was attained at the $1.38 billion asset credit union after two years of layoffs (more than 40 employees) and branch closures (six) caused by the recession-led market turmoil (The Bakersfield Californian Aug. 9). A credit union’s capital ratio is a bottom-line measure of financial stability determined by dividing its net worth by it total assets. Regulators use the gauge to judge whether a financial institution is strong enough to absorb financial losses. At the end of second quarter 2010, KSFCU’s capital ratio was 4.31%. Credit union officials said they are on the way to achieving the 7% capitalization level regulators require to be well-capitalized, the newspaper said. The credit union also charged off tens of millions of dollars of bad debt since 2009, and maintained a fairly healthy loan loss reserve to cover bad debt, the paper said.