Safe and Sound

Great Plains Bank

Eureka, SD
4
Star Rating
Started in 1920, Great Plains Bank is an FDIC-insured bank headquartered in Eureka, SD. Regulatory filings show the bank having equity of $12.5 million on $103.1 million in assets, as of December 31, 2017.

U.S. bank customers have $85.5 million on deposit at 3 offices in SD run by 21 full-time employees. With that footprint, the bank has amassed loans and leases worth $91.9 million, including $39.4 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Great Plains Bank 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 important criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial strength. It acts as a bulwark against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the more capital, the better.

Great Plains Bank did better than the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 16 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Great Plains Bank's Tier 1 capital ratio was 12.32 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, Great Plains Bank held equity amounting to 12.10 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.

A bank with a large number of these types of assets could eventually be required 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, decreasing earnings and elevating the risk of a failure in the future.

Great Plains Bank scored 28 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

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, 3.66 percent of Great Plains 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 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve 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 Great Plains Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, diminish a bank's ability to do those things.

Great Plains Bank received above-average marks on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Great Plains Bank's most recent annualized quarterly return on equity was 14.64 percent, above the national average of 8.10 percent.

The bank reported net income of $1.8 million on total equity of $12.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.76 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.