Safe and Sound

Iowa Trust & Savings Bank

Emmetsburg, IA
5
Star Rating
Founded in 1929, Iowa Trust & Savings Bank is an FDIC-insured bank headquartered in Emmetsburg, IA. The bank has equity of $24.3 million on $228.7 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 27 full-time employees, the bank holds loans and leases worth $180.0 million, including real estate loans of $137.6 million. The bank currently holds $194.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Iowa Trust & Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

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

Iowa Trust & Savings Bank finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, scoring 12 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Iowa Trust & Savings Bank's Tier 1 capital ratio was 11.84 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, Iowa Trust & Savings Bank held equity amounting to 10.63 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these types of assets suggests a bank could have to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the risk of a future failure.

On Bankrate's asset quality test, Iowa Trust & Savings Bank scored 40 out of a possible 40 points, better than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.22 percent of Iowa Trust & Savings Bank'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Iowa Trust & Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's test of earnings, Iowa Trust & Savings Bank scored 24 out of a possible 30, exceeding the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Iowa Trust & Savings Bank's most recent annualized quarterly return on equity was 15.31 percent, above the national average of 8.10 percent.

The bank recorded net income of $3.6 million on total equity of $24.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.66 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.