Safe and Sound

Citizens State Bank Norwood Young America

Norwood Young Am, MN
3
Star Rating
Started in 1914, Citizens State Bank Norwood Young America is an FDIC-insured bank headquartered in Norwood Young Am, MN. As of December 31, 2017, the bank had equity of $12.0 million on $82.0 million in assets.

Thanks to the work of 19 full-time employees, the bank has amassed loans and leases worth $53.6 million, including real estate loans of $28.6 million. The bank currently holds $69.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Citizens State Bank Norwood Young America exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is an essential measurement of a bank's financial strength. When it comes to safety and soundness, the more capital, the better.

Citizens State Bank Norwood Young America exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. Citizens State Bank Norwood Young America's Tier 1 capital ratio was 15.34 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Citizens State Bank Norwood Young America held equity amounting to 14.60 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand 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 loans.

Having a large number of these kinds of assets suggests a bank may eventually have to use capital to absorb losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, decreasing earnings and elevating the chances of a failure in the future.

Citizens State Bank Norwood Young America came in below the national average of 37.49 on Bankrate's test of asset quality, racking up 20 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 4.58 percent of Citizens State Bank Norwood Young America'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 handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Citizens State Bank Norwood Young America's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is 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. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, Citizens State Bank Norwood Young America scored 12 out of a possible 30, less than the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Citizens State Bank Norwood Young America's most recent annualized quarterly return on equity was 5.97 percent, below the national average of 8.10 percent.

The bank earned net income of $698,000 on total equity of $12.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.85 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.