Safe and Sound

DEMOCRACY

ALEXANDRIA, VA
3
Star Rating
DEMOCRACY is an ALEXANDRIA, VA-based, NCUA-insured credit union that opened its doors in 1936. The credit union has assets of $155.2 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 45 full-time employees, the credit union holds loans and leases worth $83.4 million. DEMOCRACY's 15,189 members currently have $137.3 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, DEMOCRACY exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the credit union did on the three important criteria Bankrate used to evaluate U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a credit union's financial fortitude. It works as a buffer against losses and as protection for members during times of financial trouble for the credit union. When looking at safety and soundness, more capital is preferred.

DEMOCRACY fell short of the national average of 15.26 on our test to measure the adequacy of a credit union's capital, scoring 12 out of a possible 30 points.

DEMOCRACY's capitalization ratio of 10.00 percent in our test was below the average for all credit unions, a sign that it's weaker than its peers.

Asset Quality Score

This test's purpose is to try to understand how the credit union's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due mortgages.

A credit union with large numbers of these types of assets may eventually be required to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

DEMOCRACY scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 38.15.

DEMOCRACY's ratio of troubled assets was 7.00 percent in our test, the same as the national average.

Earnings score

A credit union's ability to earn money affects its safety and soundness. Earnings can be retained by the credit union, expanding its capital cushion, or be used to address 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.

DEMOCRACY scored 2 out of a possible 30 on Bankrate's test of earnings, less than the national average of 10.31.

DEMOCRACY had an earnings ratio of 1.00 percent in our test, equal to the average for all credit unions, suggesting that it's running neck and neck with 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.