Safe and Sound

First Midwest Bank of Dexter

Dexter, MO
5
Star Rating
First Midwest Bank of Dexter is an FDIC-insured bank started in 1964 and currently based in Dexter, MO. Regulatory filings show the bank having equity of $32.7 million on assets of $326.9 million, as of December 31, 2017.

Thanks to the efforts of 76 full-time employees in 6 offices in MO, the bank has amassed loans and leases worth $277.5 million, $196.7 million of which are for real estate. U.S. bank customers currently have $280.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Midwest Bank of Dexter exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial strength, capital is valuable. When it comes to safety and soundness, more capital is preferred.

First Midwest Bank of Dexter scored below the national average of 13.13 on our test to measure capital adequacy, scoring 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. First Midwest Bank of Dexter's Tier 1 capital ratio was 11.72 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, First Midwest Bank of Dexter held equity amounting to 10.00 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having lots of these types of assets means a bank may have to use capital to cover losses, cutting down on 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, decreasing earnings and increasing the chances of a failure in the future.

First Midwest Bank of Dexter did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.35 percent of First Midwest Bank of Dexter's loans were noncurrent, meaning 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 deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First Midwest Bank of Dexter's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.

First Midwest Bank of Dexter scored 20 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. First Midwest Bank of Dexter's most recent annualized quarterly return on equity was 10.38 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $3.3 million on total equity of $32.7 million. The bank had an annualized return on average assets, or ROA, of 1.02 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.