Safe and Sound

The Baldwin State Bank

Baldwin City, KS
4
Star Rating
The Baldwin State Bank is an FDIC-insured bank founded in 1892 and currently based in Baldwin City, KS. Regulatory filings show the bank having equity of $7.9 million on $74,074,000 in assets, as of June 30, 2017.

Thanks to the work of 16 full-time employees in 2 offices in KS, the bank holds loans and leases worth $32.6 million, including $21.1 million worth of real estate loans. The bank currently holds $65.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, The Baldwin State Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during times of economic instability for the bank. It follows then that a bank's level of capital is a useful measurement of a bank's financial fortitude. When looking at safety and soundness, the more capital, the better.
The Baldwin State Bank fell below the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 12 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. The Baldwin State Bank's Tier 1 capital ratio was 24.76 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, The Baldwin State Bank held equity amounting to 10.60 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets could eventually be forced to use capital to cover losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, The Baldwin State Bank scored 40 out of a possible 40 points, above 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, 0.54 percent of The Baldwin State 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 troubled assets . Comparing the how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Baldwin State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

The Baldwin State Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The Baldwin State Bank's most recent annualized quarterly return on equity was 7.19 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $276,000 on total equity of $7.9 million. The bank had an annualized return on average assets, or ROA, of 0.76 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.