Safe and Sound

OTTER TAIL

FERGUS FALLS, MN
3
Star Rating
OTTER TAIL is a FERGUS FALLS, MN-based, NCUA-insured credit union dating back to 1954. As of December 31, 2017, the credit union had assets of $15.7 million.

Members have $4.9 million on deposit tended by 3 full-time employees. With that footprint, the credit union holds loans and leases worth $4.9 million. OTTER TAIL's 2,430 members currently have $14.3 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, OTTER TAIL exhibited a generally satisfactory condition, earning 3 out of 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 U.S. credit unions.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for members when a credit union is experiencing financial trouble. Therefore, a credit union's level of capital is a key measurement of its financial resilience. When looking at safety and soundness, the higher the capital, the better.

OTTER TAIL fell short of the national average of 15.65 on our test to measure capital adequacy, receiving a score of 8 out of a possible 30 points.

OTTER TAIL had a capitalization ratio of 8.00 percent in our test, less 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 estimate the impact of troubled assets, such as unpaid mortgages, on the credit union's loan loss reserves and overall capitalization.

A credit union with a large number of these kinds of assets may eventually have to use capital to cover losses, cutting down on 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, decreasing earnings and increasing the chances of a future failure.

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

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

Earnings score

How successful a credit union is at earning money affects its safety and soundness. A credit union can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, potentially making the credit union better able to withstand financial shocks. Losses, on the other hand, lessen a credit union's ability to do those things.

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

One sign that OTTER TAIL 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.