Safe and Sound

Citizens State Bank

Cadott, WI
4
Star Rating
Cadott, WI-based Citizens State Bank is an FDIC-insured bank founded in 1902. The bank has equity of $12.5 million on $118,861,000 in assets, according to June 30, 2017, regulatory filings.

With 37 full-time employees in 4 offices in WI, the bank has amassed loans and leases worth $88.5 million, including real estate loans of $67.8 million. U.S. bank customers currently have $94.1 million in deposits with the bank.

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

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is key. It works as a bulwark against losses and as protection for accountholders during periods of economic instability for the bank. When looking at safety and soundness, the more capital, the better.
Citizens State Bank received a score of 12 out of a possible 30 points on our test to measure the adequacy of a bank's capital, failing to reach the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizens State Bank's Tier 1 capital ratio was 13.94 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.

Overall, Citizens State Bank held equity amounting to 10.51 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these kinds of assets suggests a bank could have to use capital to absorb losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in diminished earnings and potentially more risk of a future failure.

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

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.83 percent of Citizens State Bank'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 to deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Citizens State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.

Citizens State Bank scored 14 out of a possible 30 on Bankrate's earnings test, less than the national average of 16.52.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Citizens State Bank's most recent annualized quarterly return on equity was 6.82 percent, below the national average of 9.28 percent.

The bank recorded net income of $418,000 on total equity of $12.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.70 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.