Safe and Sound

Tri-Valley Bank

Randolph, IA
2
Star Rating
Tri-Valley Bank is a Randolph, IA-based, FDIC-insured bank founded in 1917. Regulatory filings show the bank having equity of $6.9 million on $59.7 million in assets, as of December 31, 2017.

With 19 full-time employees in 3 offices in multiple states, the bank has amassed loans and leases worth $36.9 million, including real estate loans of $21.3 million. U.S. bank customers currently have $49.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Tri-Valley Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for account holders during times of economic instability for the bank. Therefore, a bank's level of capital is a valuable measurement of a bank's financial strength. When it comes to safety and soundness, more capital is better.

Tri-Valley Bank achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating out the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Tri-Valley Bank's Tier 1 capital ratio was 16.70 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Tri-Valley Bank held equity amounting to 11.57 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets means a bank could 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 thus aren't earning money, diminishing earnings and increasing the risk of a future failure.

Tri-Valley Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.88 percent of Tri-Valley Bank'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 to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Tri-Valley Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.

Tri-Valley Bank did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Tri-Valley Bank was -11.58 percent, below the national average of 8.10 percent.

The bank recorded net income of $-837,000 on total equity of $6.9 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -1.37 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.