Safe and Sound

Lee County Bank

Fort Madison, IA
5
Star Rating
Lee County Bank is an FDIC-insured bank founded in 1888 and currently headquartered in Fort Madison, IA. The bank has equity of $19.5 million on $157,411,000 in assets, according to June 30, 2017, regulatory filings.

With 33 full-time employees in 3 offices in IA, the bank holds loans and leases worth $119.6 million, including real estate loans of $98.0 million. U.S. bank customers currently have $123.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Lee County Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial resilience. It works as a bulwark against losses and affords protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the higher the capital, the better.
Lee County Bank racked up 16 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Lee County Bank's Tier 1 capital ratio was 17.80 percent, above the 6 percent level regulators consider adequate, 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 difficulties.

Overall, Lee County Bank held equity amounting to 12.36 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets suggests a bank could have to use capital to absorb losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

Lee County Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.22 percent of Lee County Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Lee County Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic shocks. However, banks that are losing money have less ability to do those things.

Lee County Bank outperformed the average on Bankrate's earnings test, achieving a score of 22 out of a possible 30.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Lee County Bank's most recent annualized quarterly return on equity was 12.43 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $1.2 million on total equity of $19.5 million. The bank reported an annualized return on average assets, or ROA, of 1.55 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.