Safe and Sound

Banterra Bank

Marion, IL
5
Star Rating
Banterra Bank is a Marion, IL-based, FDIC-insured bank dating back to 1955. Regulatory filings show the bank having equity of $145.1 million on assets of $1.57 billion, as of December 31, 2017.

Thanks to the efforts of 366 full-time employees in 39 offices in multiple states, the bank has amassed loans and leases worth $1.13 billion, including $432.4 million worth of real estate loans. U.S. bank customers currently have $1.32 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Banterra Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It acts as a bulwark against losses and affords protection for accountholders during times of financial trouble for the bank. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Banterra Bank received a score of 10 out of a possible 30 points, less than the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Banterra Bank's Tier 1 capital ratio was 10.68 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Banterra Bank held equity amounting to 9.26 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having large numbers of these kinds of assets could eventually force a bank to use capital to cover losses, shrinking 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 money, decreasing earnings and increasing the risk of a failure in the future.

On Bankrate's test of asset quality, Banterra Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.50 percent of Banterra 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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size 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 Banterra Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.

Banterra Bank scored 26 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for Banterra Bank was 16.91 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $23.6 million on total equity of $145.1 million. The bank experienced an annualized return on average assets, or ROA, of 1.57 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.