Safe and Sound

Alton Bank

Alton, MO
5
Star Rating
Alton, MO-based Alton Bank is an FDIC-insured bank started in 1924. The bank holds equity of $8.3 million on assets of $65.0 million, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 18 full-time employees in 2 offices in MO, the bank currently holds loans and leases worth $40.6 million, $27.2 million of which are for real estate. The bank currently holds $51.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Alton Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three key criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is key. It acts as a bulwark against losses and provides protection for accountholders when a bank is experiencing economic instability. When it comes to safety and soundness, the more capital, the better.
Alton Bank beat out the national average of 13.38 points on our test to measure capital adequacy, racking up 16 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Alton Bank's Tier 1 capital ratio was 14.07 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, Alton Bank held equity amounting to 12.76 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these kinds of assets could eventually be required to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

On Bankrate's test of asset quality, Alton Bank scored 40 out of a possible 40 points, beating out the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.98 percent of Alton Bank's loans were noncurrent, meaning 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 that reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Alton Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic trouble. Losses, on the other hand, reduce a bank's ability to do those things.

Alton Bank scored 26 out of a possible 30 on Bankrate's earnings test, beating out the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Alton Bank's most recent annualized quarterly return on equity was 17.70 percent, above the national average of 9.28 percent.

The bank recorded net income of $731,000 on total equity of $8.3 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 2.24 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.