Safe and Sound

State Bank of New Prague

New Prague, MN
5
Star Rating
Founded in 1883, State Bank of New Prague is an FDIC-insured bank based in New Prague, MN. Regulatory filings show the bank having equity of $14.9 million on assets of $117.4 million, as of June 30, 2017.

With 19 full-time employees, the bank has amassed loans and leases worth $39.4 million, including real estate loans of $35.9 million. U.S. bank customers currently have $101.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, State Bank of New Prague exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of 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?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It works as a cushion against losses and as protection for accountholders when a bank is experiencing financial trouble. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, State Bank of New Prague scored 16 out of a possible 30 points, beating the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. State Bank of New Prague's Tier 1 capital ratio was 22.78 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, State Bank of New Prague held equity amounting to 12.65 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

A bank with a large number of these kinds of assets may eventually be required to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, State Bank of New Prague scored 40 out of a possible 40 points, exceeding the national average of 37.62 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of State Bank of New Prague'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 troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on State Bank of New Prague'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, increasing its capital cushion, or use them to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, lessen a bank's ability to do those things.

State Bank of New Prague scored 22 out of a possible 30 on Bankrate's earnings test, beating the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for State Bank of New Prague was 12.47 percent, above the national average of 9.28 percent.

The bank earned net income of $908,000 on total equity of $14.9 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.59 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.