Safe and Sound

CARCO

DENTON, MD
4
Star Rating
Founded in 1954, CARCO is an NCUA-insured credit union headquartered in DENTON, MD. As of December 31, 2017, the credit union held assets of $5.4 million.

The credit union currently holds loans and leases worth $2.1 million. CARCO's 649 members currently have $4.7 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, CARCO exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the credit union did on the three key criteria Bankrate used to evaluate American credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for members when a credit union is struggling financially. It follows then that an institution's level of capital is an essential measurement of its financial strength. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, CARCO received a score of 14 out of a possible 30 points, failing to reach the national average of 15.65.

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

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.

Having large numbers of these kinds of assets suggests a credit union may eventually have to use capital to absorb losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

CARCO scored above the national average of 38.09 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

CARCO's ratio of troubled assets was 0.00 percent in our test, beneath the national average and suggestive of greater financial strength than 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, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the credit union better able to withstand financial shocks. Conversely, losses lessen a credit union's ability to do those things.

CARCO scored 14 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 10.11.

One sign that the credit union is running ahead of its peers in this area was its earnings ratio of 0.00 percent in our test, better than the average for all credit unions.

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.