The Shelby County State Bank
Safe and Sound
Harlan, IA
Founded in 1909, The Shelby County State Bank is an FDIC-insured bank headquartered in Harlan, IA. The bank has equity of $28.6 million on $255.8 million in assets, according to December 31, 2017, regulatory filings.
Thanks to the efforts of 49 full-time employees in 9 offices in IA, the bank holds loans and leases worth $177.6 million, including $68.0 million worth of real estate loans. U.S. bank customers currently have $225.8 million in deposits with the bank.
Overall, Bankrate believes that, as of December 31, 2017, The Shelby County State Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks.
SAFE AND SOUND?
TODAY'S SAVINGS RATES
THE INSTITUTION'S SCORE
Capital Score
Capital works as a bulwark against losses and affords protection for depositors when a bank is experiencing financial instability. Therefore, a bank's level of capital is a crucial measurement of a bank's financial strength. When looking at safety and soundness, the higher the capital, the better.
The Shelby County State Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, below the national average of 13.13.
A bank's Tier 1 capital ratio is a commonly used measure of this buffer. The Shelby County State Bank's Tier 1 capital ratio was 13.30 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.
Overall, The Shelby County State Bank held equity amounting to 11.19 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 unpaid mortgages.
Having a large number of these types of assets could eventually force a bank to use capital to absorb losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a future failure.
The Shelby County State Bank 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 helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.45 percent of The Shelby County State 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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the size of that reserve 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 Shelby County State Bank's loan loss allowance in its most recent filings.
Earnings score
A bank's earnings performance has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.
On Bankrate's earnings test, The Shelby County State Bank scored 16 out of a possible 30, beating out the national average of 15.12.
Return on equity, calculated by dividing net income (profit, essentially) 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 Shelby County State Bank was 7.89 percent, below the national average of 8.10 percent.
The bank recorded net income of $2.2 million on total equity of $28.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.87 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.
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.