Safe and Sound

CorTrust Bank National Association

Mitchell, SD
4
Star Rating
CorTrust Bank National Association is a Mitchell, SD-based, FDIC-insured bank dating back to 1930. The bank has equity of $88.5 million on assets of $796.1 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 233 full-time employees in 25 offices in multiple states, the bank currently holds loans and leases worth $661.3 million, $470.8 million of which are for real estate. U.S. bank customers currently have $692.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, CorTrust Bank National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial instability. It follows then that when it comes to measuring an a bank's financial stability, capital is valuable. When it comes to safety and soundness, the more capital, the better.

CorTrust Bank National Association finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. CorTrust Bank National Association's Tier 1 capital ratio was 11.83 percent, exceeding the 6 percent level regulators consider adequate, but less 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, CorTrust Bank National Association held equity amounting to 11.11 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 troubled assets, such as past-due loans.

Having a large number of these types of assets may eventually force a bank to use capital to cover losses, decreasing its equity cushion. 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, diminishing earnings and increasing the risk of a failure in the future.

CorTrust Bank National Association beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 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, 0.08 percent of CorTrust Bank National Association'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. CorTrust Bank National Association's loan loss allowance was 1,919.20 percent of its total noncurrent loans, exceeding the national average. All else being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's earnings performance affects its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's earnings test, CorTrust Bank National Association scored 10 out of a possible 30, falling short of the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. CorTrust Bank National Association's most recent annualized quarterly return on equity was 4.90 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $4.3 million on total equity of $88.5 million. The bank experienced an annualized return on average assets, or ROA, of 0.55 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.