Safe and Sound

Ramsey National Bank

Devils Lake, ND
5
Star Rating
Ramsey National Bank is a Devils Lake, ND-based, FDIC-insured bank started in 1892. As of December 31, 2017, the bank held equity of $31.7 million on $250.6 million in assets.

Thanks to the efforts of 62 full-time employees in 8 offices in ND, the bank has amassed loans and leases worth $179.0 million, including $105.9 million worth of real estate loans. U.S. bank customers currently have $217.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Ramsey National Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is useful. It works as a buffer against losses and as protection for accountholders when a bank is experiencing economic trouble. When looking at safety and soundness, the higher the capital, the better.

Ramsey National Bank scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Ramsey National Bank's Tier 1 capital ratio was 17.48 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, Ramsey National Bank held equity amounting to 12.63 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets could eventually be required to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, Ramsey National Bank scored 40 out of a possible 40 points, better than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.01 percent of Ramsey National 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 to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Ramsey National Bank's loan loss allowance was 21,290.91 percent of its total noncurrent loans, higher than the national average. All else being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

Ramsey National Bank beat the national average on Bankrate's earnings test, achieving a score of 22 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Ramsey National Bank's most recent annualized quarterly return on equity was 13.27 percent, above the national average of 8.10 percent.

The bank recorded net income of $4.2 million on total equity of $31.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.64 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.