Safe and Sound

First National Bank in Frankfort

Frankfort, KS
5
Star Rating
Started in 1921, First National Bank in Frankfort is an FDIC-insured bank headquartered in Frankfort, KS. The bank has equity of $4.3 million on $45.5 million in assets, according to December 31, 2017, regulatory filings.

With 7 full-time employees, the bank has amassed loans and leases worth $22.8 million, including real estate loans of $12.1 million. U.S. bank customers currently have $39.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank in Frankfort exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for account holders during periods of financial trouble for the bank. Therefore, a bank's level of capital is an important measurement of a bank's financial fortitude. From a safety and soundness perspective, the higher the capital, the better.

First National Bank in Frankfort fell below the national average of 13.13 on our test to measure capital adequacy, scoring 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. First National Bank in Frankfort's Tier 1 capital ratio was 15.58 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, First National Bank in Frankfort held equity amounting to 9.52 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

A bank with extensive holdings of these kinds of assets may eventually be required to use capital to absorb losses, cutting down on 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 money, diminishing earnings and increasing the chances of a failure in the future.

First National Bank in Frankfort exceeded 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 handy indicator of asset quality.As of December 31, 2017, 0.72 percent of First National Bank in Frankfort'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 the size of that reserve to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First National Bank in Frankfort'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 can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand financial shocks. Obviously, banks that are losing money are less able to do those things.

First National Bank in Frankfort scored 22 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for First National Bank in Frankfort was 12.69 percent, above the national average of 8.10 percent.

The bank recorded net income of $546,000 on total equity of $4.3 million for the twelve months ended December 31, 2017. The bank experienced 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.