Safe and Sound

Security Bank

New Auburn, WI
5
Star Rating
Founded in 1907, Security Bank is an FDIC-insured bank based in New Auburn, WI. As of June 30, 2017, the bank held equity of $12.4 million on assets of $95.2 million.

Thanks to the efforts of 22 full-time employees in 4 offices in WI, the bank currently holds loans and leases worth $75.7 million, including $57.0 million worth of real estate loans. The bank currently holds $82.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Security Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is key. It works as a cushion against losses and provides protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure the adequacy of a bank's capital, Security Bank racked up 18 out of a possible 30 points, above the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. Security Bank's Tier 1 capital ratio was 15.87 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial headwinds.

Overall, Security Bank held equity amounting to 13.04 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

Having extensive holdings of these types of assets suggests a bank may eventually have to use capital to cover losses, diminishing 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, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Security Bank scored 36 out of a possible 40 points, failing to reach the national average of 37.62 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, 1.94 percent of Security 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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Security Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.

Security Bank did above-average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for Security Bank was 8.67 percent, below the national average of 9.28 percent.

The bank reported net income of $524,000 on total equity of $12.4 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.09 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but 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.