Safe and Sound

Bank 1st

West Union, IA
5
Star Rating
West Union, IA-based Bank 1st is an FDIC-insured bank started in 1934. The bank holds equity of $15.5 million on assets of $121.7 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $104.0 million on deposit at 3 offices in IA run by 21 full-time employees. With that footprint, the bank holds loans and leases worth $87.6 million, including $57.9 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Bank 1st exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is experiencing economic instability. It follows then that when it comes to measuring an a bank's financial fortitude, capital is key. When it comes to safety and soundness, the more capital, the better.

Bank 1st exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 16 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Bank 1st's Tier 1 capital ratio was 17.95 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Bank 1st held equity amounting to 12.71 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

Having lots of these kinds of assets could eventually force a bank to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and increasing the chances of a future failure.

Bank 1st beat out the national average of 37.49 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 December 31, 2017, 0.10 percent of Bank 1st'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 1.01 percent.

Banks maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Bank 1st's loan loss allowance was 1,439.13 percent of its total noncurrent loans, above the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Bank 1st scored 22 out of a possible 30, beating out the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Bank 1st was 12.93 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.9 million on total equity of $15.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.60 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.