Safe and Sound

The Morris Plan Company of Terre Haute, Inc.

Terre Haute, IN
5
Star Rating
The Morris Plan Company of Terre Haute, Inc. is an FDIC-insured bank founded in 1962 and currently headquartered in Terre Haute, IN. As of December 31, 2017, the bank had equity of $22.0 million on $75.6 million in assets.

Thanks to the work of 27 full-time employees, the bank holds loans and leases worth $63.4 million, including real estate loans of $3.8 million. The bank currently holds $53.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Morris Plan Company of Terre Haute, Inc. exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It acts as a buffer against losses and provides protection for accountholders when a bank is experiencing financial trouble. When it comes to safety and soundness, the more capital, the better.

The Morris Plan Company of Terre Haute, Inc. scored above the national average of 13.13 points on our test to measure capital adequacy, racking up 30 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The Morris Plan Company of Terre Haute, Inc.'s Tier 1 capital ratio was 32.63 percent, higher than the 6 percent level considered adequate by regulators, and above 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 Morris Plan Company of Terre Haute, Inc. held equity amounting to 29.10 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 unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these types of assets could eventually force a bank to use capital to cover losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and elevating the risk of a failure in the future.

The Morris Plan Company of Terre Haute, Inc. scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 1.72 percent of The Morris Plan Company of Terre Haute, Inc.'s loans were noncurrent -- in other words, 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 deal with troubled 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 problematic loans. Unfortunately, the FDIC did not provide information on The Morris Plan Company of Terre Haute, Inc.'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, increasing its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

On Bankrate's earnings test, The Morris Plan Company of Terre Haute, Inc. scored 20 out of a possible 30, beating the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for The Morris Plan Company of Terre Haute, Inc. was 10.09 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.2 million on total equity of $22.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.86 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.