Safe and Sound

First PREMIER Bank

Sioux Falls, SD
5
Star Rating
Founded in 1914, First PREMIER Bank is an FDIC-insured bank based in Sioux Falls, SD. The bank holds equity of $240.6 million on $1,551,141,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 342 full-time employees in 17 offices in SD, the bank has amassed loans and leases worth $1.05 billion, including $253.9 million worth of real estate loans. U.S. bank customers currently have $1.26 billion in deposits with the bank.

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

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is essential. It works as a cushion against losses and affords protection for accountholders when a bank is experiencing economic instability. When looking at safety and soundness, the higher the capital, the better.
First PREMIER Bank exceeded the national average of 13.38 points on our test to measure the adequacy of a bank's capital, racking up 22 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. First PREMIER Bank's Tier 1 capital ratio was 20.41 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, First PREMIER Bank held equity amounting to 15.51 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

A bank with lots of these types of assets may eventually have to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

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

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.16 percent of First PREMIER 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 problem assets . Comparing the the size of that reserve to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. First PREMIER Bank's loan loss allowance was 934.68 percent of its total noncurrent loans, above the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, lessen a bank's ability to do those things.

First PREMIER Bank outperformed the average on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First PREMIER Bank was 11.23 percent, above the national average of 9.28 percent.

The bank earned net income of $13.3 million on total equity of $240.6 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.72 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.