Safe and Sound

Heartland Bank

Little Rock, AR
NR
Star Rating
Heartland Bank is an FDIC-insured bank founded in 1933 and currently based in Little Rock, AR. The bank has equity of $8.8 million on $199,193,000 in assets, according to June 30, 2017, regulatory filings.

U.S. bank customers have $187.0 million on deposit at 5 offices in AR run by 37 full-time employees. With that footprint, the bank holds loans and leases worth $126.4 million, including real estate loans of $44.5 million.

Overall, Bankrate did not have enough information on this institution to give it a star rating. Keep reading for an analysis of how the bank faired on the three key criteria Bankrate used to grade American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is valuable. It acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the higher the capital, the better.
Heartland Bank came in below the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 0 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Heartland Bank's Tier 1 capital ratio was 5.52 percent, less than the 6 percent level regulators consider adequate, and below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Heartland Bank held equity amounting to 4.41 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is 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 unpaid mortgages.

Having lots of these kinds of assets means a bank may have to use capital to cover losses, diminishing its equity buffer. 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 depressed earnings and potentially more risk of a failure in the future.

Heartland Bank scored 0 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 37.62.

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, 18.04 percent of Heartland Bank'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 . Comparing the the size of that reserve to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Heartland Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Heartland Bank scored 0 out of a possible 30, coming in below the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Heartland Bank's most recent annualized quarterly return on equity was -168.44 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $-11.8 million on total equity of $8.8 million. The bank experienced an annualized return on average assets, or ROA, of -11.68 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.