Safe and Sound

State Bank of Brooks

Corning, IA
4
Star Rating
State Bank of Brooks is a Corning, IA-based, FDIC-insured bank that opened its doors in 1914. The bank has equity of $2.1 million on assets of $16.5 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 3 full-time employees, the bank currently holds loans and leases worth $3.8 million, $2.2 million of which are for real estate. U.S. bank customers currently have $14.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, State Bank of Brooks exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for account holders during times of economic instability for the bank. It follows then that when it comes to measuring an an institution's financial strength, capital is key. When it comes to safety and soundness, the higher the capital, the better.

State Bank of Brooks did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 16 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. State Bank of Brooks's Tier 1 capital ratio was 40.03 percent, exceeding the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, State Bank of Brooks held equity amounting to 12.59 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually be forced to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a future failure.

State Bank of Brooks did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 3.65 percent of State Bank of Brooks's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

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

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, State Bank of Brooks scored 6 out of a possible 30, less than the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. State Bank of Brooks's most recent annualized quarterly return on equity was 2.17 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $45,000 on total equity of $2.1 million. The bank had an annualized return on average assets, or ROA, of 0.27 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.