Safe and Sound

The Bank of Landisburg

Landisburg, PA
5
Star Rating
The Bank of Landisburg is an FDIC-insured bank started in 1903 and currently headquartered in Landisburg, PA. The bank holds equity of $49.6 million on $282.1 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 50 full-time employees in 4 offices in PA, the bank holds loans and leases worth $205.0 million, including $195.2 million worth of real estate loans. U.S. bank customers currently have $231.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Bank of Landisburg exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major 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

Capital acts as a cushion against losses and affords protection for depositors during times of economic instability for the bank. Therefore, a bank's level of capital is an important measurement of an institution's financial fortitude. From a safety and soundness perspective, more capital is preferred.

The Bank of Landisburg racked up 26 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. The Bank of Landisburg's Tier 1 capital ratio was 28.66 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, The Bank of Landisburg held equity amounting to 17.58 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

Having lots of these types of assets suggests a bank may eventually have to use capital to cover losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, diminishing earnings and increasing the risk of a future failure.

The Bank of Landisburg fell below the national average of 37.49 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 2.77 percent of The Bank of Landisburg'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The Bank of Landisburg'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 cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, The Bank of Landisburg scored 12 out of a possible 30, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for The Bank of Landisburg was 5.16 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $2.5 million on total equity of $49.6 million. The bank reported an annualized return on average assets, or ROA, of 0.92 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.