Safe and Sound

River Valley Bank

Wausau, WI
5
Star Rating
Started in 1967, River Valley Bank is an FDIC-insured bank based in Wausau, WI. As of December 31, 2017, the bank held equity of $116.6 million on assets of $1.26 billion.

Thanks to the work of 252 full-time employees in 18 offices in multiple states, the bank currently holds loans and leases worth $970.0 million, including real estate loans of $684.9 million. U.S. bank customers currently have $1.09 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, River Valley 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.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is useful. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.

River Valley Bank received a score of 6 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.19.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. River Valley Bank's Tier 1 capital ratio was 9.81 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.67 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, River Valley Bank held equity amounting to 9.28 percent of its assets, which was lower than the national average of 12.04 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 past-due mortgages.

A bank with a large number of these types of assets could eventually have to use capital to cover losses, diminishing its buffer of equity. 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 diminished earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, River Valley Bank scored 40 out of a possible 40 points, better than the national average of 37.70 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.25 percent of River Valley Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.14 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used 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 River Valley Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank better able to withstand economic shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, River Valley Bank scored 24 out of a possible 30, beating out the national average of 16.06.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for River Valley Bank was 15.57 percent, above the national average of 8.10 percent.

The bank recorded net income of $17.7 million on total equity of $116.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.47 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.