Safe and Sound

PCSB Bank

Clarinda, IA
4
Star Rating
PCSB Bank is an FDIC-insured bank started in 1866 and currently based in Clarinda, IA. Regulatory filings show the bank having equity of $24.4 million on $225,298,000 in assets, as of June 30, 2017.

Thanks to the work of 47 full-time employees in 6 offices in IA, the bank has amassed loans and leases worth $145.3 million, including $85.8 million worth of real estate loans. U.S. bank customers currently have $200.5 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, PCSB Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors during periods of financial instability for the bank. Therefore, when it comes to measuring an an institution's financial strength, capital is important. From a safety and soundness perspective, more capital is preferred.
PCSB Bank received a score of 12 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. PCSB Bank's Tier 1 capital ratio was 14.33 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, PCSB Bank held equity amounting to 10.83 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a future failure.

PCSB Bank did better than the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 1.12 percent of PCSB 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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on PCSB 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. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, diminish a bank's ability to do those things.

PCSB Bank scored 16 out of a possible 30 on Bankrate's earnings test, coming in below 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 PCSB Bank was 7.94 percent, below the national average of 9.28 percent.

The bank recorded net income of $940,000 on total equity of $24.4 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.84 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.