Safe and Sound

DEMOCRACY

ALEXANDRIA, VA
3
Star Rating
ALEXANDRIA, VA-based DEMOCRACY is an NCUA-insured credit union started in 1936. Regulatory filings show the credit union having assets of $152.6 million, as of December 31, 2017.

Thanks to the efforts of 44 full-time employees, the credit union holds loans and leases worth $84.8 million. DEMOCRACY's 14,915 members currently have $135.6 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DEMOCRACY exhibited a generally satisfactory condition, earning 3 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 works as a cushion against losses and as protection for members when a credit union is experiencing financial instability. It follows then that when it comes to measuring an a credit union's financial resilience, capital is useful. When looking at safety and soundness, the higher the capital, the better.

DEMOCRACY received a score of 12 out of a possible 30 points on our test to measure capital adequacy, below the national average of 15.65.

DEMOCRACY had a capitalization ratio of 12.00 percent in our test, below the average for all credit unions, suggesting that it's on less solid financial footing than its peers.

Asset Quality Score

This test is intended to estimate how the credit union's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

Having a large number of these kinds of assets may eventually require a credit union to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and increasing the risk of a failure in the future.

On Bankrate's asset quality test, DEMOCRACY scored 40 out of a possible 40 points, above the national average of 38.09 points.

Troubled assets made up 0.00 percent of DEMOCRACY's total assets in our test, less than the national average and potentially indicative of superior financial strength compared to other credit unions.

Earnings score

A credit union's earnings performance has an effect on its long-term survivability. A credit union can retain its earnings, expanding its capital buffer, or use them to address problematic loans, likely making the credit union better able to withstand economic shocks. Losses, on the other hand, take away from a credit union's ability to do those things.

On Bankrate's test of earnings, DEMOCRACY scored 2 out of a possible 30, coming in below the national average of 10.11.

The credit union had an earnings ratio of 0.00 percent in our test, above the average for all credit unions, suggesting 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.