Safe and Sound

Citizens First State Bank of Walnut

Walnut, IL
4
Star Rating
Walnut, IL-based Citizens First State Bank of Walnut is an FDIC-insured bank started in 1920. As of December 31, 2017, the bank held equity of $3.6 million on assets of $46.9 million.

Thanks to the efforts of 9 full-time employees, the bank holds loans and leases worth $22.6 million, including $15.6 million worth of real estate loans. U.S. bank customers currently have $43.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens First State Bank of Walnut exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial resilience. It acts as a cushion against losses and provides protection for depositors during times of economic instability for the bank. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, Citizens First State Bank of Walnut received a score of 6 out of a possible 30 points, failing to reach the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Citizens First State Bank of Walnut's Tier 1 capital ratio was 16.82 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, Citizens First State Bank of Walnut held equity amounting to 7.66 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these kinds of assets could eventually force a bank to use capital to cover losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

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

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.32 percent of Citizens First State Bank of Walnut's loans were noncurrent -- in other words, 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 handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Citizens First State Bank of Walnut's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Conversely, losses diminish a bank's ability to do those things.

Citizens First State Bank of Walnut underperformed the average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Citizens First State Bank of Walnut was 5.62 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $194,000 on total equity of $3.6 million. The bank experienced an annualized return on average assets, or ROA, of 0.41 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.