Safe and Sound

American State Bank of Grygla

Grygla, MN
4
Star Rating
Founded in 1976, American State Bank of Grygla is an FDIC-insured bank headquartered in Grygla, MN. Regulatory filings show the bank having equity of $5.7 million on assets of $51.9 million, as of June 30, 2017.

With 15 full-time employees in 2 offices in MN, the bank has amassed loans and leases worth $32.7 million, including real estate loans of $17.2 million. U.S. bank customers currently have $46.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, American State Bank of Grygla exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial strength, capital is key. From a safety and soundness perspective, the more capital, the better.
American State Bank of Grygla came in below the national average of 13.38 on our test to measure capital adequacy, racking up 12 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. American State Bank of Grygla's Tier 1 capital ratio was 17.18 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, American State Bank of Grygla held equity amounting to 10.96 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand 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.

Having extensive holdings of these types of assets could eventually force a bank to use capital to absorb 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 thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, American State Bank of Grygla scored 36 out of a possible 40 points, lower than the national average of 37.62 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 2.32 percent of American State Bank of Grygla's loans were noncurrent -- in other words, 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on American State Bank of Grygla's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

American State Bank of Grygla scored 18 out of a possible 30 on Bankrate's earnings test, above the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. American State Bank of Grygla's most recent annualized quarterly return on equity was 8.92 percent, below the national average of 9.28 percent.

The bank earned net income of $249,000 on total equity of $5.7 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.94 percent, below the 1 percent deemed satisfactory in accordance with industry standards and 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.