Safe and Sound

State Bank of Arthur

Arthur, IL
4
Star Rating
State Bank of Arthur is an FDIC-insured bank started in 1910 and currently headquartered in Arthur, IL. Regulatory filings show the bank having equity of $18.3 million on $131,079,000 in assets, as of June 30, 2017.

With 18 full-time employees in 2 offices in IL, the bank currently holds loans and leases worth $61.1 million, including real estate loans of $25.6 million. U.S. bank customers currently have $112.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, State Bank of Arthur exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. It follows then that a bank's level of capital is an essential measurement of an institution's financial resilience. When looking at safety and soundness, the higher the capital, the better.
State Bank of Arthur achieved a score of 18 out of a possible 30 points on our test to measure the adequacy of a bank's capital, exceeding the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. State Bank of Arthur's Tier 1 capital ratio was 24.74 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, State Bank of Arthur held equity amounting to 13.93 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is 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 past-due mortgages.

Having extensive holdings of these types of assets means a bank could have to use capital to cover losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

State Bank of Arthur did better than the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.86 percent of State Bank of Arthur'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 1.04 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on State Bank of Arthur's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

On Bankrate's test of earnings, State Bank of Arthur scored 12 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. State Bank of Arthur's most recent annualized quarterly return on equity was 5.30 percent, below the national average of 9.28 percent.

The bank recorded net income of $474,000 on total equity of $18.3 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.73 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.