Safe and Sound

Brainerd Savings and Loan Association, A Federal Association

1
Star Rating
Brainerd, MN-based Brainerd Savings and Loan Association, A Federal Association is an FDIC-insured bank started in 1922. As of December 31, 2017, the bank held equity of $5.3 million on assets of $69.1 million.

Thanks to the work of 19 full-time employees in 2 offices in MN, the bank has amassed loans and leases worth $49.5 million, including real estate loans of $48.2 million. The bank currently holds $55.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Brainerd Savings and Loan Association, A Federal Association exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for account holders during periods of financial trouble for the bank. Therefore, a bank's level of capital is a useful measurement of a bank's financial resilience. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Brainerd Savings and Loan Association, A Federal Association received a score of 6 out of a possible 30 points, falling short of the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Brainerd Savings and Loan Association, A Federal Association's Tier 1 capital ratio was 12.81 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Brainerd Savings and Loan Association, A Federal Association held equity amounting to 7.67 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets suggests a bank may have to use capital to absorb losses, reducing 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 interest for the bank, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Brainerd Savings and Loan Association, A Federal Association scored 24 out of a possible 40 points, failing to reach the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 1.72 percent of Brainerd Savings and Loan Association, A Federal Association's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 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 widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Brainerd Savings and Loan Association, A Federal Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. 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 times of trouble. However, banks that are losing money are less able to do those things.

Brainerd Savings and Loan Association, A Federal Association scored 0 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. Brainerd Savings and Loan Association, A Federal Association's most recent annualized quarterly return on equity was -3.94 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $-215,000 on total equity of $5.3 million. The bank experienced an annualized return on average assets, or ROA, of -0.33 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.