Safe and Sound

First Security Bank - Sleepy Eye

Sleepy Eye, MN
5
Star Rating
Sleepy Eye, MN-based First Security Bank - Sleepy Eye is an FDIC-insured bank founded in 1882. As of December 31, 2017, the bank had equity of $29.7 million on assets of $212.7 million.

Thanks to the efforts of 43 full-time employees in 7 offices in MN, the bank holds loans and leases worth $144.5 million, $85.6 million of which are for real estate. The bank currently holds $173.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First Security Bank - Sleepy Eye exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is important. It works as a cushion against losses and as protection for accountholders during times of financial instability for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, First Security Bank - Sleepy Eye achieved a score of 18 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. First Security Bank - Sleepy Eye's Tier 1 capital ratio was 17.55 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, First Security Bank - Sleepy Eye held equity amounting to 13.94 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these kinds of assets suggests a bank may eventually have to use capital to cover losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, First Security Bank - Sleepy Eye scored 40 out of a possible 40 points, beating the national average of 37.49 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.67 percent of First Security Bank - Sleepy Eye'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First Security Bank - Sleepy Eye's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

First Security Bank - Sleepy Eye exceeded the national average on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for First Security Bank - Sleepy Eye was 12.01 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $3.5 million on total equity of $29.7 million. The bank experienced an annualized return on average assets, or ROA, of 1.68 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.