Safe and Sound

VISIONBANK OF IOWA

Ames, IA
5
Star Rating
VISIONBANK OF IOWA is an FDIC-insured bank founded in 1884 and currently based in Ames, IA. Regulatory filings show the bank having equity of $50.1 million on assets of $452.7 million, as of December 31, 2017.

U.S. bank customers have $345.0 million on deposit at 8 offices in IA run by 89 full-time employees. With that footprint, the bank holds loans and leases worth $377.8 million, including $344.6 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, VISIONBANK OF IOWA exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial strength. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, VISIONBANK OF IOWA 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. VISIONBANK OF IOWA's Tier 1 capital ratio was 12.22 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, VISIONBANK OF IOWA held equity amounting to 11.07 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these types of assets could eventually be required to use capital to cover losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

VISIONBANK OF IOWA scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.49.

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, 0.06 percent of VISIONBANK OF IOWA'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 keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. VISIONBANK OF IOWA's loan loss allowance was 1,912.34 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

VISIONBANK OF IOWA did above-average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. VISIONBANK OF IOWA's most recent annualized quarterly return on equity was 8.19 percent, above the national average of 8.10 percent.

The bank recorded net income of $4.0 million on total equity of $50.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.88 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.