Safe and Sound

THE LOCAL

STERLING HEIGHT, MI
4
Star Rating
THE LOCAL is an NCUA-insured credit union started in 1949 and currently based in STERLING HEIGHT, MI. As of June 30, 2017, the credit union had assets of $96.2 million.

Thanks to the efforts of 20 full-time employees, the credit union currently holds loans and leases worth $47.0 million. THE LOCAL's 7,449 members currently have $81.5 million in shares with the credit union.

Overall, Bankrate believes that, as of June 30, 2017, THE LOCAL exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union faired on the three key criteria Bankrate used to grade American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring a credit union's financial strength, capital is key. It works as a bulwark against losses and as protection for members during periods of financial instability for the credit union. When it comes to safety and soundness, the more capital, the better.

THE LOCAL exceeded the national average of 15.26 points on our test to measure capital adequacy, receiving a score of 20 out of a possible 30 points.

THE LOCAL had a capitalization ratio of 14.00 percent in our test, better than the average for all credit unions, suggesting that it could be more resilient in a crisis than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as past-due mortgages, on the credit union's capitalization and allocated loan loss reserves.

Having extensive holdings of these kinds of assets means a credit union may have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the chances of a failure in the future.

THE LOCAL beat out the national average of 38.15 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A lower-than-average ratio of problem assets of 3.00 percent in our test was potentially indicative of superior financial strength compared to other credit unions.

Earnings score

How successful a credit union is at making money affects its safety and soundness. A credit union can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the credit union more resilient in times of trouble. Credit unions that are losing money, however, have less ability to do those things.

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

THE LOCAL had an earnings ratio of 2.00 percent in our test, higher than the average for all credit unions, suggesting that it's beating 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.