Safe and Sound

Center Point Bank and Trust Company

Center Point, IA
4
Star Rating
Center Point, IA-based Center Point Bank and Trust Company is an FDIC-insured bank started in 1964. The bank holds equity of $2.7 million on $35.4 million in assets, according to December 31, 2017, regulatory filings.

With 6 full-time employees, the bank currently holds loans and leases worth $20.8 million, including real estate loans of $15.3 million. U.S. bank customers currently have $30.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Center Point Bank and Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is key. It acts as a cushion against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, more capital is better.

Center Point Bank and Trust Company received a score of 6 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Center Point Bank and Trust Company's Tier 1 capital ratio was 10.66 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Center Point Bank and Trust Company held equity amounting to 7.50 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.

Having a large number of these kinds of assets may eventually force a bank to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and elevating the risk of a failure in the future.

Center Point Bank and Trust Company fell below the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Center Point Bank and Trust Company'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Center Point Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

Center Point Bank and Trust Company scored 24 out of a possible 30 on Bankrate's earnings test, beating the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. Center Point Bank and Trust Company's most recent annualized quarterly return on equity was 14.75 percent, above the national average of 8.10 percent.

The bank recorded net income of $375,000 on total equity of $2.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.07 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.