Safe and Sound

First Secure Community Bank

Sugar Grove, IL
4
Star Rating
First Secure Community Bank is an FDIC-insured bank founded in 2000 and currently based in Sugar Grove, IL. Regulatory filings show the bank having equity of $26.3 million on $241,371,000 in assets, as of June 30, 2017.

With 34 full-time employees in 3 offices in IL, the bank has amassed loans and leases worth $184.7 million, including real estate loans of $150.4 million. U.S. bank customers currently have $196.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First Secure Community Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial strength. It acts as a cushion against losses and affords protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, more capital is preferred.
First Secure Community Bank scored below the national average of 13.38 on our test to measure capital adequacy, achieving a score of 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. First Secure Community Bank's Tier 1 capital ratio was 11.42 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic difficulties.

Overall, First Secure Community Bank held equity amounting to 10.92 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 loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having lots of these types of assets suggests a bank may have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

First Secure Community Bank fell below the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 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, 1.36 percent of First Secure Community Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

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

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.

First Secure Community Bank underperformed the average on Bankrate's earnings test, achieving a score of 10 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. First Secure Community Bank's most recent annualized quarterly return on equity was 5.75 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $652,000 on total equity of $26.3 million. The bank had an annualized return on average assets, or ROA, of 0.56 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.