Safe and Sound

Sterling Bank

Poplar Bluff, MO
5
Star Rating
Sterling Bank is an FDIC-insured bank started in 2004 and currently headquartered in Poplar Bluff, MO. Regulatory filings show the bank having equity of $138.3 million on $1,341,761,000 in assets, as of June 30, 2017.

With 147 full-time employees in 11 offices in multiple states, the bank holds loans and leases worth $1.00 billion, including real estate loans of $385.9 million. U.S. bank customers currently have $1.17 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Sterling Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did 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 acts as a buffer against losses and affords protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial stability, capital is key. When it comes to safety and soundness, the more capital, the better.
On our test to measure capital adequacy, Sterling Bank received a score of 12 out of a possible 30 points, below the national average of 13.38.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Sterling Bank's Tier 1 capital ratio was 11.19 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Sterling Bank held equity amounting to 10.31 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets could eventually force a bank to use capital to absorb losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, pushing down earnings and elevating the risk of a failure in the future.

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

A helpful 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 Sterling 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 to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Sterling Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

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

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Sterling Bank was 11.02 percent, above the national average of 9.28 percent.

The bank recorded net income of $7.5 million on total equity of $138.3 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.10 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but 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.