Safe and Sound

Bank of Bearden

Bearden, AR
5
Star Rating
Bank of Bearden is an FDIC-insured bank started in 1945 and currently based in Bearden, AR. As of June 30, 2017, the bank held equity of $6.1 million on $49,645,000 in assets.

With 8 full-time employees, the bank holds loans and leases worth $27.5 million, including real estate loans of $15.5 million. U.S. bank customers currently have $43.5 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of Bearden exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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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 cushion against losses and as protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, more capital is preferred.
Bank of Bearden scored 16 out of a possible 30 points on our test to measure capital adequacy, exceeding the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. Bank of Bearden's Tier 1 capital ratio was 20.10 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Bank of Bearden held equity amounting to 12.34 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

Having large numbers of these types of assets suggests a bank could have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in diminished earnings and potentially more risk of a failure in the future.

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

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.15 percent of Bank of Bearden'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 that reserve's size to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Bank of Bearden's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Conversely, losses diminish a bank's ability to do those things.

Bank of Bearden scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 16.52.

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. Bank of Bearden's most recent annualized quarterly return on equity was 10.38 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $315,000 on total equity of $6.1 million. The bank experienced an annualized return on average assets, or ROA, of 1.33 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.