Safe and Sound

1st State Bank of Mason City

Mason City, IL
5
Star Rating
1st State Bank of Mason City is a Mason City, IL-based, FDIC-insured bank founded in 1977. Regulatory filings show the bank having equity of $3.7 million on assets of $28.2 million, as of June 30, 2017.

Thanks to the work of 5 full-time employees, the bank holds loans and leases worth $10.9 million, $6.1 million of which are for real estate. The bank currently holds $24.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, 1st State Bank of Mason City exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three important criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It acts as a buffer against losses and provides protection for depositors when a bank is experiencing financial instability. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, 1st State Bank of Mason City achieved a score of 18 out of a possible 30 points, exceeding the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. 1st State Bank of Mason City's Tier 1 capital ratio was 29.04 percent, higher than the 6 percent level considered adequate by regulators, and above the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, 1st State Bank of Mason City held equity amounting to 13.23 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due loans.

A bank with a large number of these types of assets may eventually be forced to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

1st State Bank of Mason City scored above the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.45 percent of 1st State Bank of Mason City's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on 1st State Bank of Mason City's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

On Bankrate's test of earnings, 1st State Bank of Mason City scored 16 out of a possible 30, lower than the national average of 16.52.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for 1st State Bank of Mason City was 7.98 percent, below the national average of 9.28 percent.

The bank reported net income of $146,000 on total equity of $3.7 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.04 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.








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.