Safe and Sound

Conway Bank

Conway Springs, KS
2
Star Rating
Conway Bank is a Conway Springs, KS-based, FDIC-insured bank that opened its doors in 1886. Regulatory filings show the bank having equity of $9.3 million on $102.4 million in assets, as of December 31, 2017.

Thanks to the work of 33 full-time employees in 4 offices in KS, the bank holds loans and leases worth $76.1 million, $49.5 million of which are for real estate. The bank currently holds $85.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Conway Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial strength. It works as a buffer against losses and affords protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, the higher the capital, the better.

Conway Bank received a score of 8 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Conway Bank's Tier 1 capital ratio was 10.61 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, Conway Bank held equity amounting to 9.05 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these kinds of assets may eventually have to use capital to cover losses, shrinking its equity cushion. 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, pushing down earnings and elevating the risk of a failure in the future.

On Bankrate's test of asset quality, Conway Bank scored 28 out of a possible 40 points, falling short of the national average of 37.49 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, 2.70 percent of Conway Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Conway Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

Conway Bank fell behind the national average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Conway Bank's most recent annualized quarterly return on equity was -5.38 percent, below the national average of 8.10 percent.

The bank recorded net income of $-452,000 on total equity of $9.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.58 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.