Safe and Sound

DEMOCRAT P & L

LITTLE ROCK, AR
5
Star Rating
LITTLE ROCK, AR-based DEMOCRAT P & L is an NCUA-insured credit union founded in 1939. As of December 31, 2017, the credit union held assets of $1.9 million.

The credit union holds loans and leases worth $1.2 million. DEMOCRAT P & L's 366 members currently have $1.5 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, DEMOCRAT P & L exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the credit union faired on the three key criteria Bankrate used to evaluate American credit unions on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for members during times of financial instability for the credit union. Therefore, when it comes to measuring an a credit union's financial strength, capital is key. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, DEMOCRAT P & L racked up 30 out of a possible 30 points, beating the national average of 15.65.

DEMOCRAT P & L appears to be stronger than its peers, with a capitalization ratio of 30.00 percent in our test, higher than the average for all credit unions.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due mortgages, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these types of assets may eventually require a credit union to use capital to cover losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the credit union, resulting in depressed earnings and potentially more risk of a failure in the future.

DEMOCRAT P & L did better than the national average of 38.09 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

Earnings score

A credit union's ability to earn money affects its safety and soundness. A credit union can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the credit union better prepared to withstand financial trouble. Conversely, losses lessen a credit union's ability to do those things.

DEMOCRAT P & L fell behind the national average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

One sign that DEMOCRAT P & L is doing better than 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.