Safe and Sound

Peoples Savings and Loan Association of Monticello Indiana

Monticello, IN
5
Star Rating
Peoples Savings and Loan Association of Monticello Indiana is an FDIC-insured bank started in 1899 and currently headquartered in Monticello, IN. The bank holds equity of $12.8 million on assets of $30.9 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 5 full-time employees, the bank has amassed loans and leases worth $19.1 million, including $19.1 million worth of real estate loans. U.S. bank customers currently have $17.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Peoples Savings and Loan Association of Monticello Indiana exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for depositors during times of financial instability for the bank. It follows then that a bank's level of capital is a useful measurement of an institution's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Peoples Savings and Loan Association of Monticello Indiana achieved a score of 30 out of a possible 30 points, above the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Peoples Savings and Loan Association of Monticello Indiana's Tier 1 capital ratio was 98.38 percent, above the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, Peoples Savings and Loan Association of Monticello Indiana held equity amounting to 41.61 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having lots of these types of assets suggests a bank may eventually have to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

Peoples Savings and Loan Association of Monticello Indiana scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.49.

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, 2.06 percent of Peoples Savings and Loan Association of Monticello Indiana'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 troubled assets known as an "allowance for loan and lease losses." How large that reserve is 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 Peoples Savings and Loan Association of Monticello Indiana's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, Peoples Savings and Loan Association of Monticello Indiana scored 2 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Peoples Savings and Loan Association of Monticello Indiana was 0.50 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $64,000 on total equity of $12.8 million. The bank had an annualized return on average assets, or ROA, of 0.20 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.