Safe and Sound

LOCAL GOVERNMENT

Raleigh, NC
3
Star Rating
LOCAL GOVERNMENT is a Raleigh, NC-based, NCUA-insured credit union that opened its doors in 1983. The credit union has assets of $1.89 billion, according to June 30, 2017, regulatory filings.

Members have $1.49 billion on deposit tended by 170 full-time employees. With that footprint, the credit union currently holds loans and leases worth $1.49 billion. Its 306,234 members currently have $1.71 billion in shares with the credit union.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for members during periods of economic trouble for the credit union. Therefore, an institution's level of capital is a valuable measurement of its financial strength. From a safety and soundness perspective, the higher the capital, the better.

LOCAL GOVERNMENT received a score of 8 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 15.26.

LOCAL GOVERNMENT had a capitalization ratio of 9.00 percent in our test, less than the average for all credit unions, a sign that it's on less solid financial footing than its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as unpaid loans, on the credit union's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets could eventually require a credit union to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the credit union, resulting in reduced earnings and potentially more risk of a failure in the future.

LOCAL GOVERNMENT scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 38.15.

LOCAL GOVERNMENT's ratio of problem assets was 13.00 percent in our test, higher than the national average and a potential cause for concern.

Earnings score

How successful a credit union is at earning money has an effect on its safety and soundness. Earnings may be retained by the credit union, increasing its capital buffer, or be used to address problematic loans, potentially making the credit union better able to withstand financial trouble. However, credit unions that are losing money have less ability to do those things.

LOCAL GOVERNMENT scored 6 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 10.31.

The credit union had an earnings ratio of 3.00 percent in our test, better than the average for all credit unions, a sign 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.