Safe and Sound

Community State Bank of Missouri

Bowling Green, MO
5
Star Rating
Community State Bank of Missouri is an FDIC-insured bank founded in 1887 and currently headquartered in Bowling Green, MO. The bank has equity of $30.3 million on $247.8 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $216.9 million on deposit at 2 offices in MO run by 41 full-time employees. With that footprint, the bank has amassed loans and leases worth $145.0 million, including $116.0 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Community State Bank of Missouri exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for depositors when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial strength, capital is valuable. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, Community State Bank of Missouri racked up 16 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Community State Bank of Missouri's Tier 1 capital ratio was 13.12 percent, higher than 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 stand up to financial downturns.

Overall, Community State Bank of Missouri held equity amounting to 12.22 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these kinds of assets may eventually require a bank to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

Community State Bank of Missouri exceeded the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.11 percent of Community State Bank of Missouri'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 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 at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Community State Bank of Missouri's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

Community State Bank of Missouri received above-average marks on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for Community State Bank of Missouri was 10.20 percent, above the national average of 8.10 percent.

The bank recorded net income of $3.0 million on total equity of $30.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.23 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.