Safe and Sound

Marshall County State Bank

Newfolden, MN
5
Star Rating
Marshall County State Bank is an FDIC-insured bank founded in 1922 and currently based in Newfolden, MN. As of December 31, 2017, the bank held equity of $6.0 million on $34.6 million in assets.

Thanks to the efforts of 5 full-time employees, the bank holds loans and leases worth $8.0 million, $4.9 million of which are for real estate. The bank currently holds $28.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Marshall County State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial strength. It works as a bulwark against losses and affords protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Marshall County State Bank achieved a score of 26 out of a possible 30 points, above the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Marshall County State Bank's Tier 1 capital ratio was 69.67 percent, exceeding the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Marshall County State Bank held equity amounting to 17.22 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having a large number of these types of assets means a bank could eventually have to use capital to cover 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, resulting in lower earnings and potentially more risk of a failure in the future.

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

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, 0.47 percent of Marshall County State Bank'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 problem assets . Comparing how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Marshall County State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Marshall County State Bank scored 12 out of a possible 30, lower than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Marshall County State Bank's most recent annualized quarterly return on equity was 5.95 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $344,000 on total equity of $6.0 million. The bank experienced an annualized return on average assets, or ROA, of 1.03 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.