Safe and Sound

Paper City Savings Association

Wisconsin Rapids, WI
4
Star Rating
Wisconsin Rapids, WI-based Paper City Savings Association is an FDIC-insured bank founded in 1933. The bank holds equity of $20.9 million on assets of $158.4 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 40 full-time employees in 3 offices in WI, the bank holds loans and leases worth $131.6 million, including real estate loans of $128.5 million. U.S. bank customers currently have $136.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Paper City Savings Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial trouble. It follows then that when it comes to measuring an an institution's financial strength, capital is important. From a safety and soundness perspective, the more capital, the better.

Paper City Savings Association scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 16 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Paper City Savings Association's Tier 1 capital ratio was 22.33 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, Paper City Savings Association held equity amounting to 13.20 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these types of assets could eventually be forced to use capital to absorb losses, shrinking its equity cushion. 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, diminishing earnings and increasing the chances of a future failure.

On Bankrate's asset quality test, Paper City Savings Association scored 36 out of a possible 40 points, less than the national average of 37.49 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.26 percent of Paper City Savings Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." 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 problem assets. Unfortunately, the FDIC did not provide information on Paper City Savings Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

Paper City Savings Association received below-average marks on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important measure of a bank's earnings. Paper City Savings Association's most recent annualized quarterly return on equity was 6.10 percent, below the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $20.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.77 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.