Safe and Sound

First Security Bank of Malta

Malta, MT
4
Star Rating
Malta, MT-based First Security Bank of Malta is an FDIC-insured bank started in 1972. The bank holds equity of $3.7 million on assets of $37.8 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 11 full-time employees, the bank has amassed loans and leases worth $17.5 million, including real estate loans of $5.6 million. U.S. bank customers currently have $34.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Security Bank of Malta exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It acts as a buffer against losses and affords protection for depositors during times of financial trouble for the bank. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, First Security Bank of Malta received a score of 10 out of a possible 30 points, less than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. First Security Bank of Malta's Tier 1 capital ratio was 21.91 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, First Security Bank of Malta held equity amounting to 9.73 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these kinds of assets means a bank could eventually have to use capital to cover losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

First Security Bank of Malta scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

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, 0.99 percent of First Security Bank of Malta'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 known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on First Security Bank of Malta's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's test of earnings, First Security Bank of Malta scored 14 out of a possible 30, failing to reach 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 total equity. The most recent annualized quarterly return on equity for First Security Bank of Malta was 6.79 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $253,000 on total equity of $3.7 million. The bank had an annualized return on average assets, or ROA, of 0.71 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.