Safe and Sound

St. Clair State Bank (Incorporated)

Saint Clair, MN
5
Star Rating
St. Clair State Bank (Incorporated) is an FDIC-insured bank founded in 1907 and currently based in Saint Clair, MN. Regulatory filings show the bank having equity of $10.8 million on $91.0 million in assets, as of December 31, 2017.

Thanks to the work of 11 full-time employees, the bank has amassed loans and leases worth $68.1 million, $33.5 million of which are for real estate. U.S. bank customers currently have $79.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, St. Clair State Bank (Incorporated) exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for account holders during periods of economic trouble for the bank. It follows then that when it comes to measuring an a bank's financial resilience, capital is important. When looking at safety and soundness, more capital is better.

St. Clair State Bank (Incorporated) exceeded the national average of 13.13 points on our test to measure capital adequacy, racking up 14 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. St. Clair State Bank (Incorporated)'s Tier 1 capital ratio was 15.86 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, St. Clair State Bank (Incorporated) held equity amounting to 11.89 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand 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.

Having large numbers of these types of assets could eventually require a bank to use capital to cover losses, shrinking 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 reduced earnings and potentially more risk of a future failure.

St. Clair State Bank (Incorporated) scored 40 out of a possible 40 points on Bankrate's test of asset quality, better than the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.01 percent of St. Clair State Bank (Incorporated)'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 deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. St. Clair State Bank (Incorporated)'s loan loss allowance was 13,755.56 percent of its total noncurrent loans, above the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, St. Clair State Bank (Incorporated) scored 24 out of a possible 30, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. St. Clair State Bank (Incorporated)'s most recent annualized quarterly return on equity was 15.35 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.6 million on total equity of $10.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.81 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.