Safe and Sound

Chetopa State Bank & Trust Co.

Chetopa, KS
5
Star Rating
Chetopa, KS-based Chetopa State Bank & Trust Co. is an FDIC-insured bank started in 1901. The bank has equity of $3.5 million on assets of $34.2 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 6 full-time employees, the bank currently holds loans and leases worth $24.7 million, $14.9 million of which are for real estate. The bank currently holds $30.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Chetopa State Bank & Trust Co. 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 major criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is essential. It acts as a cushion against losses and as protection for accountholders during times of financial trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, Chetopa State Bank & Trust Co. received a score of 12 out of a possible 30 points, lower than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Chetopa State Bank & Trust Co.'s Tier 1 capital ratio was 14.30 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, Chetopa State Bank & Trust Co. held equity amounting to 10.14 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand 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 large numbers of these kinds of assets suggests a bank may have to use capital to cover losses, shrinking its equity cushion. Many of those assets are also likely to be 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.

Chetopa State Bank & Trust Co. scored above the national average of 37.49 on Bankrate's asset quality test, 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, none of Chetopa State Bank & Trust Co.'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 how large that reserve is to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Chetopa State Bank & Trust Co.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

Chetopa State Bank & Trust Co. beat the national average on Bankrate's test of earnings, achieving a score of 26 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Chetopa State Bank & Trust Co.'s most recent annualized quarterly return on equity was 16.58 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $560,000 on total equity of $3.5 million. The bank reported an annualized return on average assets, or ROA, of 1.68 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.