Safe and Sound

The Citizens First National Bank of Storm Lake

Storm Lake, IA
5
Star Rating
The Citizens First National Bank of Storm Lake is an FDIC-insured bank founded in 1902 and currently headquartered in Storm Lake, IA. As of December 31, 2017, the bank held equity of $22.7 million on $211.8 million in assets.

Thanks to the efforts of 41 full-time employees in 3 offices in IA, the bank currently holds loans and leases worth $123.6 million, $34.9 million of which are for real estate. U.S. bank customers currently have $186.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Citizens First National Bank of Storm Lake exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is key. It works as a bulwark against losses and provides protection for depositors when a bank is experiencing economic instability. From a safety and soundness perspective, more capital is preferred.

On our test to measure capital adequacy, The Citizens First National Bank of Storm Lake received a score of 12 out of a possible 30 points, coming in below the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Citizens First National Bank of Storm Lake's Tier 1 capital ratio was 16.26 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, The Citizens First National Bank of Storm Lake held equity amounting to 10.73 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 past-due mortgages.

Having extensive holdings of these kinds of assets means a bank could have to use capital to cover losses, diminishing 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 diminished earnings and potentially more risk of a future failure.

The Citizens First National Bank of Storm Lake 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 .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.11 percent of The Citizens First National Bank of Storm Lake'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Citizens First National Bank of Storm Lake's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance 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. Obviously, banks that are losing money have less ability to do those things.

The Citizens First National Bank of Storm Lake outperformed the average on Bankrate's test of earnings, achieving a score of 28 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for The Citizens First National Bank of Storm Lake was 17.70 percent, above the national average of 8.10 percent.

The bank earned net income of $4.2 million on total equity of $22.7 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.95 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.