Safe and Sound

TWO HARBORS

Two Harbors, MN
4
Star Rating
TWO HARBORS is a Two Harbors, MN-based, NCUA-insured credit union dating back to 1948. Regulatory filings show the credit union having $72.7 million in assets, as of December 31, 2017.

With 14 full-time employees, the credit union currently holds loans and leases worth $47.7 million. TWO HARBORS's 4,500 members currently have $60.5 million in shares with the credit union.

Overall, Bankrate believes that, as of December 31, 2017, TWO HARBORS exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the credit union faired on the three important criteria Bankrate used to grade U.S. credit unions.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for members when a credit union is experiencing financial instability. It follows then that an institution's level of capital is a key measurement of its financial strength. When looking at safety and soundness, the more capital, the better.

TWO HARBORS scored 22 out of a possible 30 points on our test to measure the adequacy of a credit union's capital, above the national average of 15.65.

TWO HARBORS's capitalization ratio of 22.00 percent in our test was higher than the average for all credit unions, a sign that it's on more solid financial footing than its peers.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due loans, on the credit union's reserves set aside to cover loan losses, as well as overall capitalization.

A credit union with lots of these types of assets may eventually be required to use capital to cover losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the credit union, resulting in reduced earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, TWO HARBORS scored 40 out of a possible 40 points, better than 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 greater financial strength than other credit unions.

Earnings score

A credit union's profitability affects its safety and soundness. A credit union can retain its earnings, increasing its capital buffer, or use them to address problematic loans, potentially making the credit union better able to withstand financial shocks. Conversely, losses diminish a credit union's ability to do those things.

TWO HARBORS did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One sign that the credit union is doing better than its peers in this area was its earnings ratio of 0.00 percent in our test, higher 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.