Safe and Sound

Kirkwood Bank & Trust Co.

Bismarck, ND
4
Star Rating
Kirkwood Bank & Trust Co. is a Bismarck, ND-based, FDIC-insured bank founded in 1975. The bank has equity of $21.1 million on $243.9 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $220.9 million on deposit at 4 offices in ND run by 53 full-time employees. With that footprint, the bank holds loans and leases worth $157.5 million, including $116.5 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Kirkwood Bank & Trust Co. 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 important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is crucial. It acts as a cushion against losses and affords protection for accountholders during periods of economic trouble for the bank. From a safety and soundness perspective, the more capital, the better.

Kirkwood Bank & Trust Co. received a score of 8 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Kirkwood Bank & Trust Co.'s Tier 1 capital ratio was 11.61 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, Kirkwood Bank & Trust Co. held equity amounting to 8.65 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 loan loss reserves and overall capitalization.

A bank with large numbers of these types of assets could eventually have to use capital to cover losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

Kirkwood Bank & Trust Co. did better than the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A handy 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 Kirkwood Bank & Trust Co.'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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the size of that reserve to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Kirkwood Bank & Trust Co.'s loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Banks that are losing money, however, have less ability to do those things.

Kirkwood Bank & Trust Co. scored 18 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Kirkwood Bank & Trust Co. was 8.92 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.8 million on total equity of $21.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.78 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.