Safe and Sound

LOC

FARMINGTON, MI
2
Star Rating
LOC is a FARMINGTON, MI-based, NCUA-insured credit union founded in 1950. Regulatory filings show the credit union having $215.2 million in assets, as of December 31, 2017.

With 44 full-time employees, the credit union holds loans and leases worth $110.0 million. Its 25,190 members currently have $198.1 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, LOC exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union faired on the three key criteria Bankrate used to grade U.S. credit unions.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for members when a credit union is struggling financially. It follows then that when it comes to measuring an a credit union's financial strength, capital is essential. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, LOC received a score of 2 out of a possible 30 points, failing to reach the national average of 15.65.

LOC had a capitalization ratio of 2.00 percent in our test, worse than the average for all credit unions, a sign that it's weaker than its peers.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid loans, on the credit union's capitalization and allocated loan loss reserves.

Having extensive holdings of these kinds of assets suggests a credit union may eventually have to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the chances of a future failure.

LOC scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 38.09.

LOC's ratio of problem assets was 0.00 percent in our test, less than the national average and potentially indicative of greater financial strength than other credit unions.

Earnings score

A credit union's earnings performance affects its long-term survivability. Earnings can be retained by the credit union, boosting its capital cushion, or be used to address problematic loans, potentially making the credit union more resilient in tough times. Credit unions that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, LOC scored 0 out of a possible 30, less than 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 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.