Safe and Sound

Heritage Bank National Association

Spicer, MN
Star Rating
Heritage Bank National Association is an FDIC-insured bank founded in 1964 and currently headquartered in Spicer, MN. As of June 30, 2017, the bank held equity of $39.3 million on assets of $384.1 million.

Thanks to the work of 128 full-time employees in 12 offices in multiple states, the bank currently holds loans and leases worth $323.3 million, $192.6 million of which are for real estate. U.S. bank customers currently have $303.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Heritage Bank National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to score U.S. banks.


Find out


Capital Score

Capital is an important measurement of a bank's financial resilience. It acts as a cushion against losses and as protection for accountholders during periods of financial trouble for the bank. When it comes to safety and soundness, the more capital, the better.
Heritage Bank National Association received a score of 10 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Heritage Bank National Association's Tier 1 capital ratio was 11.72 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, Heritage Bank National Association held equity amounting to 10.23 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 past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these kinds of assets means a bank may have to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and increasing the chances of a failure in the future.

Heritage Bank National Association scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.48 percent of Heritage Bank National Association'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 1.04 percent.

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

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand economic shocks. Obviously, banks that are losing money are less able to do those things.

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

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Heritage Bank National Association's most recent annualized quarterly return on equity was 8.45 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $1.7 million on total equity of $39.3 million. The bank reported an annualized return on average assets, or ROA, of 0.89 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?'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 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.