Safe and Sound

Riverwind Bank

Augusta, AR
4
Star Rating
Augusta, AR-based Riverwind Bank is an FDIC-insured bank founded in 1935. The bank holds equity of $9.7 million on assets of $99.9 million, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 30 full-time employees in 4 offices in AR, the bank currently holds loans and leases worth $66.0 million, including $46.2 million worth of real estate loans. U.S. bank customers currently have $87.8 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Riverwind Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial fortitude. It works as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.
Riverwind Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, falling short of the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Riverwind Bank's Tier 1 capital ratio was 13.87 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Riverwind Bank held equity amounting to 9.72 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 past-due mortgages.

A bank with large numbers of these kinds of assets may eventually have to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a future failure.

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

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.92 percent of Riverwind Bank's loans were noncurrent -- in other words, 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Riverwind Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, take away from a bank's ability to do those things.

Riverwind Bank received below-average marks on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Riverwind Bank's most recent annualized quarterly return on equity was 7.24 percent, below the national average of 9.28 percent.

The bank recorded net income of $340,000 on total equity of $9.7 million for the twelve months ended June 30, 2017. The bank reported 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.