Safe and Sound

Miner County Bank

Howard, SD
4
Star Rating
Miner County Bank is a Howard, SD-based, FDIC-insured bank founded in 1926. The bank has equity of $6.0 million on assets of $52.3 million, according to June 30, 2017, regulatory filings.

With 12 full-time employees in 2 offices in SD, the bank currently holds loans and leases worth $33.7 million, including real estate loans of $17.0 million. U.S. bank customers currently have $43.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Miner County Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for accountholders during periods of economic instability for the bank. It follows then that a bank's level of capital is a crucial measurement of a bank's financial resilience. From a safety and soundness perspective, more capital is preferred.
Miner County Bank received a score of 8 out of a possible 30 points on our test to measure the adequacy of a bank's capital, coming in below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Miner County Bank's Tier 1 capital ratio was 12.39 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 means the bank will be better able to weather financial challenges.

Overall, Miner County Bank held equity amounting to 11.53 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 impact of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to absorb losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, reducing earnings and elevating the chances of a failure in the future.

Miner County Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of Miner County 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 1.04 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Miner County Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

Miner County Bank underperformed the average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Miner County Bank was 5.35 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $160,000 on total equity of $6.0 million. The bank reported an annualized return on average assets, or ROA, of 0.62 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?

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.