Morningstar | MyState Continues to Face Challenging Operating Conditions
As a small regional bank, MyState’s strengths include high customer loyalty, conservative capital management, strong credit quality, and an expanding distribution network. The bank’s loan portfolio is heavily skewed to Tasmania, but is expanding outside the state through increasing broker usage, enhancing geographic diversification and reducing risk profile. The loan book is dominated by residential home loans, backed by solid retail deposit funding. We expect the bank to continue delivering solid operating results with low bad debts. MyState has lower bad-debt costs than peers due to its relatively conservative lending practices and focus on home loans, but struggles to generate comparable profitability with much smaller customer base and higher funding and operating costs. The wealth management division remains profitable and provides a valuable revenue stream despite underperforming over the past few years.MyState is a provider of banking, trustee and wealth management products and services through its wholly-owned subsidiaries MyState Bank Limited and Tasmanian Perpetual Trustees Limited. The banking division's product offerings include lending, encompassing home loans, personal, overdraft, line of credit and commercial products; transactional savings accounts and fixed term deposits; and insurance products. The wealth management division is a provider of funds management, financial planning and trustee services. It operates predominantly within Tasmania. As of June 30 2016, Co. had total assets of A$4.42 billion and total deposits of A$3.26 billion.
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