Safe and Sound

Adams Dairy Bank

Blue Springs, MO
4
Star Rating
Founded in 2008, Adams Dairy Bank is an FDIC-insured bank based in Blue Springs, MO. The bank has equity of $11.5 million on assets of $131.1 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 17 full-time employees, the bank holds loans and leases worth $90.5 million, including real estate loans of $86.3 million. U.S. bank customers currently have $104.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Adams Dairy Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial fortitude. It works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Adams Dairy Bank received a score of 8 out of a possible 30 points, lower than the national average of 13.38.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Adams Dairy Bank's Tier 1 capital ratio was 13.13 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, Adams Dairy Bank held equity amounting to 8.76 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these kinds of assets may eventually be forced to use capital to cover losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a future failure.

Adams Dairy Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.79 percent of Adams Dairy 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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Adams Dairy Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses lessen a bank's ability to do those things.

Adams Dairy Bank scored 18 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 16.52.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Adams Dairy Bank was 9.06 percent, below the national average of 9.28 percent.

The bank earned net income of $512,000 on total equity of $11.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.