Safe and Sound

RCSBank

New London, MO
4
Star Rating
New London, MO-based RCSBank is an FDIC-insured bank started in 1944. Regulatory filings show the bank having equity of $6.6 million on $74,580,000 in assets, as of June 30, 2017.

Thanks to the work of 23 full-time employees in 4 offices in MO, the bank holds loans and leases worth $55.1 million, including real estate loans of $33.7 million. The bank currently holds $63.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, RCSBank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for depositors when a bank is experiencing financial trouble. It follows then that a bank's level of capital is a valuable measurement of an institution's financial resilience. When looking at safety and soundness, more capital is better.
RCSBank received a score of 8 out of a possible 30 points on our test to measure the adequacy of a bank's capital, below the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. RCSBank's Tier 1 capital ratio was 10.45 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, RCSBank held equity amounting to 8.82 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets could eventually have to use capital to cover losses, decreasing its cushion of equity. 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, pushing down earnings and increasing the chances of a future failure.

RCSBank did better than the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.02 percent of RCSBank'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 how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. RCSBank's loan loss allowance was 7,200.00 percent of its total noncurrent loans, higher than the national average. All things 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. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.

RCSBank did below-average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. RCSBank's most recent annualized quarterly return on equity was 6.67 percent, below the national average of 9.28 percent.

The bank recorded net income of $202,000 on total equity of $6.6 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.59 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.