Safe and Sound

NEIGHBORHOOD

Dallas, TX
5
Star Rating
NEIGHBORHOOD is a Dallas, TX-based, NCUA-insured credit union started in 1930. The credit union holds $630.1 million in assets, according to June 30, 2017, regulatory filings.

Thanks to the work of 170 full-time employees, the credit union holds loans and leases worth $454.2 million. Its 48,676 members currently have $541.2 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, NEIGHBORHOOD exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three important criteria Bankrate used to evaluate American credit unions on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial strength. It works as a bulwark against losses and as protection for members during periods of economic trouble for the credit union. From a safety and soundness perspective, the higher the capital, the better.

NEIGHBORHOOD received a score of 12 out of a possible 30 points on our test to measure capital adequacy, falling short of the national average of 15.26.

NEIGHBORHOOD appears to be less well prepared for financial trouble than its peers in this area, with a capitalization ratio of 11.00 percent in our test, worse than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as past-due loans, on the credit union's loan loss reserves and overall capitalization.

Having large numbers of these kinds of assets may eventually force a credit union to use capital to absorb losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, NEIGHBORHOOD scored 40 out of a possible 40 points, above the national average of 38.15 points.

Troubled assets made up 4.00 percent of NEIGHBORHOOD's total assets in our test, lower than the national average and potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's profitability has an effect on its safety and soundness. Earnings can be retained by the credit union, increasing its capital cushion, or be used to address problematic loans, potentially making the credit union better prepared to withstand financial shocks. Obviously, credit unions that are losing money are less able to do those things.

NEIGHBORHOOD scored 18 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 10.31.

NEIGHBORHOOD had an earnings ratio of 9.00 percent in our test, above the average for all credit unions, a sign 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.