Safe and Sound

NORTHERN ENERGY

MANKATO, MN
4
Star Rating
MANKATO, MN-based NORTHERN ENERGY is an NCUA-insured credit union founded in 1933. The credit union holds assets of $4.3 million, according to December 31, 2017, regulatory filings.

Its 763 members currently have $3.6 million in shares with the credit union. With that footprint, the credit union has amassed loans and leases worth $3.0 million.

Overall, Bankrate believes that, as of December 31, 2017, NORTHERN ENERGY exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the credit union did on the three major criteria Bankrate used to grade American 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 as protection for members during periods of economic instability for the credit union. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. When looking at safety and soundness, the higher the capital, the better.

NORTHERN ENERGY scored above the national average of 15.65 points on our test to measure capital adequacy, scoring 22 out of a possible 30 points.

NORTHERN ENERGY's capitalization ratio of 22.00 percent in our test was better than the average for all credit unions, suggesting that it could have an easier time weathering financial trouble 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 lots of these kinds of assets may eventually force a credit union to use capital to absorb losses, reducing its equity cushion. 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 depressed earnings and potentially more risk of a future failure.

NORTHERN ENERGY scored above the national average of 38.09 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

NORTHERN ENERGY's ratio of problem assets was 0.00 percent in our test, beneath the national average and suggestive of superior financial strength compared to other credit unions.

Earnings score

A credit union's earnings performance affects its safety and soundness. A credit union can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the credit union better prepared to withstand economic trouble. Losses, on the other hand, take away from a credit union's ability to do those things.

On Bankrate's earnings test, NORTHERN ENERGY scored 4 out of a possible 30, coming in below the national average of 10.11.

One indication that NORTHERN ENERGY is outperforming 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.