Safe and Sound

The National Bank of Indianapolis

Indianapolis, IN
4
Star Rating
The National Bank of Indianapolis is an Indianapolis, IN-based, FDIC-insured bank started in 1993. As of December 31, 2017, the bank had equity of $162.2 million on assets of $2.12 billion.

U.S. bank customers have $1.78 billion on deposit at 13 offices in IN run by 323 full-time employees. With that footprint, the bank has amassed loans and leases worth $1.38 billion, including real estate loans of $994.2 million.

Overall, Bankrate believes that, as of December 31, 2017, The National Bank of Indianapolis 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 key criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is crucial. It works as a bulwark against losses and provides protection for accountholders when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

The National Bank of Indianapolis scored below the national average of 13.13 on our test to measure capital adequacy, receiving a score of 6 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. The National Bank of Indianapolis's Tier 1 capital ratio was 10.66 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, The National Bank of Indianapolis held equity amounting to 7.66 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

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

The National Bank of Indianapolis 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 widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.44 percent of The National Bank of Indianapolis'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 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is 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 National Bank of Indianapolis's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, The National Bank of Indianapolis scored 18 out of a possible 30, beating out the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for The National Bank of Indianapolis was 10.15 percent, above the national average of 8.10 percent.

The bank reported net income of $15.9 million on total equity of $162.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.78 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.