Safe and Sound

First Security Bank

Union Star, MO
3
Star Rating
Started in 1890, First Security Bank is an FDIC-insured bank headquartered in Union Star, MO. As of December 31, 2017, the bank had equity of $2.1 million on assets of $30.7 million.

U.S. bank customers have $28.6 million on deposit at 2 offices in MO run by 8 full-time employees. With that footprint, the bank holds loans and leases worth $17.4 million, including real estate loans of $12.7 million.

Overall, Bankrate believes that, as of December 31, 2017, First Security Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for depositors during times of economic instability for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is essential. When looking at safety and soundness, the more capital, the better.

First Security Bank fell below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 4 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. First Security Bank's Tier 1 capital ratio was 14.47 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, First Security Bank held equity amounting to 6.93 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid 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 equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the risk of a failure in the future.

First Security Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, below 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, 0.04 percent of First Security Bank'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 problem 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 helpful indicator when evaluating a bank's ability to manage problem assets. First Security Bank's loan loss allowance was 3,385.71 percent of its total noncurrent loans, higher than the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

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

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. First Security Bank's most recent annualized quarterly return on equity was 6.00 percent, below the national average of 8.10 percent.

The bank earned net income of $127,000 on total equity of $2.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.42 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.