Safe and Sound

Marion County State Bank

Pella, IA
5
Star Rating
Pella, IA-based Marion County State Bank is an FDIC-insured bank founded in 1935. The bank has equity of $32.3 million on assets of $298.0 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 35 full-time employees in 2 offices in IA, the bank currently holds loans and leases worth $212.9 million, $137.8 million of which are for real estate. U.S. bank customers currently have $249.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Marion County State 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 evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial stability, capital is useful. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, Marion County State Bank received a score of 12 out of a possible 30 points, falling short of the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Marion County State Bank's Tier 1 capital ratio was 13.88 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.

Overall, Marion County State Bank held equity amounting to 10.85 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

Having a large number of these kinds of assets means 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 no longer earning money, pushing down earnings and increasing the chances of a failure in the future.

Marion County State Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.36 percent of Marion County State 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Marion County State Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial shocks. Conversely, losses reduce a bank's ability to do those things.

Marion County State Bank exceeded the national average on Bankrate's earnings test, achieving a score of 28 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Marion County State Bank's most recent annualized quarterly return on equity was 18.76 percent, above the national average of 8.10 percent.

The bank earned net income of $6.1 million on total equity of $32.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 2.09 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.