Safe and Sound

Bank of Bearden

Bearden, AR
5
Star Rating
Bank of Bearden is an FDIC-insured bank founded in 1945 and currently headquartered in Bearden, AR. The bank has equity of $6.1 million on assets of $55.1 million, according to December 31, 2017, regulatory filings.

With 8 full-time employees, the bank currently holds loans and leases worth $27.5 million, including real estate loans of $15.4 million. U.S. bank customers currently have $49.0 million in deposits with the bank.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It acts as a cushion against losses and affords protection for accountholders during times of economic trouble for the bank. When it comes to safety and soundness, the higher the capital, the better.

Bank of Bearden scored above the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Bank of Bearden's Tier 1 capital ratio was 14.03 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Bank of Bearden held equity amounting to 11.02 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as past-due mortgages.

Having lots of these types of assets could eventually require a bank to use capital to cover losses, cutting down on 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 reduced earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Bank of Bearden scored 40 out of a possible 40 points, beating the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.06 percent of Bank of Bearden'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Bank of Bearden's loan loss allowance was 1,666.67 percent of its total noncurrent loans, above 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, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, Bank of Bearden scored 20 out of a possible 30, above the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for Bank of Bearden was 11.06 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $675,000 on total equity of $6.1 million. The bank reported an annualized return on average assets, or ROA, of 1.36 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.