Safe and Sound

Shell Lake State Bank

Shell Lake, WI
5
Star Rating
Shell Lake State Bank is an FDIC-insured bank started in 1916 and currently based in Shell Lake, WI. As of December 31, 2017, the bank had equity of $32.9 million on $197.3 million in assets.

Thanks to the efforts of 35 full-time employees in 4 offices in WI, the bank currently holds loans and leases worth $86.4 million, including real estate loans of $65.8 million. The bank currently holds $162.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Shell Lake State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is key. It acts as a cushion against losses and affords protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, more capital is better.

Shell Lake State Bank exceeded the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 24 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Shell Lake State Bank's Tier 1 capital ratio was 32.80 percent, exceeding the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, Shell Lake State Bank held equity amounting to 16.65 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these types of assets could eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a future failure.

Shell Lake State Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

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, 0.22 percent of Shell Lake State 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Shell Lake State 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 put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. However, banks that are losing money are less able to do those things.

Shell Lake State Bank scored 18 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Shell Lake State Bank's most recent annualized quarterly return on equity was 8.34 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $2.7 million on total equity of $32.9 million. The bank had an annualized return on average assets, or ROA, of 1.43 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.