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 unpaid loans.
Having a large number of these types of assets suggests a bank could have to use capital to cover losses, reducing its cushion 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, decreasing earnings and increasing the risk of a failure in the future.
Farmers State Bank of Alto Pass, Ill. finished below the national average of 37.49 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .
The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality. As of December 31, 2017, 1.01 percent of Farmers State Bank of Alto Pass, Ill.'s loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's exactly equal to the national average.
Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Farmers State Bank of Alto Pass, Ill.'s loan loss allowance in its most recent filings.