Safe and Sound

LOCAL GOVERNMENT

Raleigh, NC
3
Star Rating
Started in 1983, LOCAL GOVERNMENT is an NCUA-insured credit union based in Raleigh, NC. The credit union has $1.91 billion in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 162 full-time employees, the credit union holds loans and leases worth $1.57 billion. Its 321,118 members currently have $1.72 billion in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, LOCAL GOVERNMENT exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the credit union did on the three major criteria Bankrate used to evaluate U.S. credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for members during periods of economic trouble for the credit union. Therefore, a credit union's level of capital is a crucial measurement of its financial strength. From a safety and soundness perspective, the higher the capital, the better.

LOCAL GOVERNMENT received a score of 8 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 15.65.

LOCAL GOVERNMENT's capitalization ratio of 8.00 percent in our test was worse than the average for all credit unions, suggesting that it's less well prepared for financial trouble than its peers.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due loans, on the credit union's capitalization and allocated loan loss reserves.

Having a large number of these types of assets could eventually require a credit union to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, LOCAL GOVERNMENT scored 32 out of a possible 40 points, below the national average of 38.09 points.

A below-average ratio of troubled assets of 0.00 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 earning money affects its safety and soundness. Earnings can be retained by the credit union, giving a boost to its capital buffer, or be used to address problematic loans, likely making the credit union better prepared to withstand economic shocks. Credit unions that are losing money, however, are less able to do those things.

LOCAL GOVERNMENT did above-average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

One indication that LOCAL GOVERNMENT is running ahead of its peers in this area was its earnings ratio of 0.00 percent in our test, above 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.