Safe and Sound

Dutton State Bank

Dutton, MT
4
Star Rating
Dutton State Bank is an FDIC-insured bank started in 1960 and currently headquartered in Dutton, MT. As of June 30, 2017, the bank had equity of $6.7 million on $60,272,000 in assets.

Thanks to the work of 21 full-time employees in 4 offices in MT, the bank has amassed loans and leases worth $51.6 million, including $19.9 million worth of real estate loans. U.S. bank customers currently have $51.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Dutton State Bank 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 major criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is important. It works as a bulwark against losses and affords protection for depositors during periods of economic trouble for the bank. When looking at safety and soundness, more capital is preferred.
Dutton State Bank beat out the national average of 13.38 points on our test to measure capital adequacy, receiving a score of 14 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Dutton State Bank's Tier 1 capital ratio was 12.54 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic challenges.

Overall, Dutton State Bank held equity amounting to 11.16 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these kinds of assets may eventually force a bank to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

Dutton State Bank finished below the national average of 37.62 on Bankrate's asset quality test, racking up 36 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 June 30, 2017, 1.28 percent of Dutton State Bank'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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Dutton State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Dutton State Bank scored 18 out of a possible 30, better than the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Dutton State Bank's most recent annualized quarterly return on equity was 9.99 percent, above the national average of 9.28 percent.

The bank earned net income of $335,000 on total equity of $6.7 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.10 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 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.