Safe and Sound

First Bank of Bancroft

Bancroft, NE
5
Star Rating
Bancroft, NE-based First Bank of Bancroft is an FDIC-insured bank founded in 1884. Regulatory filings show the bank having equity of $3.5 million on $23.1 million in assets, as of December 31, 2017.

Thanks to the work of 4 full-time employees, the bank currently holds loans and leases worth $13.3 million, $7.3 million of which are for real estate. The bank currently holds $18.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First Bank of Bancroft 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 important criteria Bankrate used to evaluate American banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is crucial. It acts as a buffer against losses and affords protection for accountholders when a bank is experiencing economic trouble. When it comes to safety and soundness, the higher the capital, the better.

First Bank of Bancroft scored above the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 22 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. First Bank of Bancroft's Tier 1 capital ratio was 21.40 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, First Bank of Bancroft held equity amounting to 15.16 percent of its assets, which exceeded 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 loans, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets suggests a bank could eventually have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, decreasing earnings and increasing the risk of a future failure.

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

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of First Bank of Bancroft'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." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First Bank of Bancroft's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's test of earnings, First Bank of Bancroft scored 12 out of a possible 30, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for First Bank of Bancroft was 5.88 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $206,000 on total equity of $3.5 million. The bank had an annualized return on average assets, or ROA, of 0.89 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.