Safe and Sound

Dakota Prairie Bank

Fort Pierre, SD
5
Star Rating
Dakota Prairie Bank is an FDIC-insured bank founded in 1906 and currently headquartered in Fort Pierre, SD. The bank has equity of $9.7 million on $84.9 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $74.9 million on deposit at 3 offices in SD run by 20 full-time employees. With that footprint, the bank holds loans and leases worth $57.6 million, including real estate loans of $15.5 million.

Overall, Bankrate believes that, as of December 31, 2017, Dakota Prairie Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial strength. It works as a bulwark against losses and provides protection for accountholders when a bank is experiencing financial instability. When it comes to safety and soundness, more capital is better.

On our test to measure capital adequacy, Dakota Prairie Bank scored 14 out of a possible 30 points, exceeding the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Dakota Prairie Bank's Tier 1 capital ratio was 15.37 percent, higher than 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 stand up to economic headwinds.

Overall, Dakota Prairie Bank held equity amounting to 11.38 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 effect of troubled assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets may eventually force a bank to use capital to absorb losses, decreasing 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, resulting in lower earnings and potentially more risk of a future failure.

Dakota Prairie Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

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 Dakota Prairie Bank'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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Dakota Prairie 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. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money are less able to do those things.

Dakota Prairie Bank did above-average on Bankrate's test of earnings, achieving a score of 22 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Dakota Prairie Bank was 13.10 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.2 million on total equity of $9.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.48 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.