Iowa Bank Closed by Regulators
by Gene Kirsch | November 28, 2011
On November 18, 2011, regulators closed Polk County Bank in Johnston, Iowa. Following Friday’s closings, a total of 90 U.S. banks and thrifts failed in 2011, behind last year’s pace of 149. The closing of Polk County Bank is the first bank failure for Iowa since September 4, 2009.
The failed Iowa bank with assets of $99.4 million at June 30, 2011 had a Weiss Financial Strength Rating of E+, E or E- (“Very Weak”) for the last ten quarters. It was first identified as “Weak” in June 2008.
Polk County Bank reported a loss of more than $1.4 million through the period ended June 30, 2011. Contributing to its closing were below-FDIC-mandated Tier 1 (5%) and risk-based capital (6%) ratios of 2.19% and 4.13%, respectively. Nonperforming loans represented 11.4% of its loan portfolio.
Grinnell State Bank, located in Grinnell, Iowa, with assets of $171.8 million and a Weiss Rating of A, will assume the deposits of Polk County Bank. Grinnell has high Tier 1 capital of 12.98% and moderate risk based capital of 15.28%. The bank also had very low nonperforming loans of 0.07% and $963 thousand in net income through June 30, 2011 or an ROA of 1.15%, well above industry standards of 0.87%.
Iowa’s banking industry remains relatively healthy with almost 47% earning a Weiss rating of B (Good) or better. One Iowa institution, New Albin Savings Bank, earned the Weiss top rating of A+; less than 1% of all financial institutions earn that distinction. Weiss recommends institutions with a B+ rating or better. For information on specific institution ratings, consumers can visit WeissRatings.com.
Iowa Institutions |
Percent of Iowa Institutions |
Weiss Rating as of June 30, 2011 Results |
Rating Definition |
44 |
13% |
A Range |
Excellent |
119 |
34% |
B Range |
Good |
138 |
40% |
C Range |
Fair |
39 |
11% |
D Range |
Weak |
4 |
1% |
E Range |
Weakest |
1 |
0% |
F |
Failed |
2 |
< 1% |
Unrated |
Insufficient Data |
347 |
|
|
|
The total assets for all institutions that failed in 2011 were $35.2 billion with $31.2 billion in total deposits. Last year, the total of assets for all 157 failures was $79.6 billion with $92.1 billion in total deposits.
Of the 90 institutions that failed in 2011, 88 banks or 98%, were rated E (“Very Weak”) by Weiss at the time of failure. Weiss rates 404 more banks and thrifts “Very Weak” nationwide. Consumers can view the full list of failed banks at Weiss Ratings.
Weiss Ratings is the nation’s leading, independent provider of financial strength ratings and analysis for the bank and insurance industries.
Gene Kirsch, senior financial analyst at Weiss Ratings, has more than 20 years of financial industry experience in credit-risk management, commercial lending and loan review analysis within various sized credit unions, finance companies and banks at both the retail and commercial level. He leads the firm's bank and thrift ratings division and developed the methodology for Weiss' credit union ratings.