Safe and Sound

MERCED MUNICIPAL EMPLOYEES

MERCED, CA
3
Star Rating
Founded in 1951, MERCED MUNICIPAL EMPLOYEES is an NCUA-insured credit union headquartered in MERCED, CA. The credit union holds $1.9 million in assets, according to December 31, 2017, regulatory filings.

MERCED MUNICIPAL EMPLOYEES's 361 members currently have $1.7 million in shares with the credit union. With that footprint, the credit union has amassed loans and leases worth $1.4 million.

Overall, Bankrate believes that, as of December 31, 2017, MERCED MUNICIPAL EMPLOYEES exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the credit union did on the three major 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 buffer against losses and affords protection for members during periods of financial trouble for the credit union. Therefore, an institution's level of capital is a crucial measurement of its financial strength. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, MERCED MUNICIPAL EMPLOYEES received a score of 12 out of a possible 30 points, failing to reach the national average of 15.65.

MERCED MUNICIPAL EMPLOYEES had a capitalization ratio of 12.00 percent in our test, less than the average for all credit unions, suggesting that it could have a harder time weathering financial trouble than its peers.

Asset Quality Score

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

Having lots of these types of assets means a credit union may have to use capital to cover losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the credit union, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, MERCED MUNICIPAL EMPLOYEES scored 40 out of a possible 40 points, beating out the national average of 38.09 points.

Earnings score

How successful a credit union is at making money has an effect on its long-term survivability. Earnings can be retained by the credit union, increasing its capital buffer, or be used to deal with problematic loans, potentially making the credit union better prepared to withstand financial trouble. Losses, on the other hand, reduce a credit union's ability to do those things.

MERCED MUNICIPAL EMPLOYEES scored 0 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 10.11.

One sign that MERCED MUNICIPAL EMPLOYEES is beating 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.