Safe and Sound

FirsTier Bank

Kimball, NE
5
Star Rating
FirsTier Bank is an FDIC-insured bank founded in 1955 and currently headquartered in Kimball, NE. The bank has equity of $45.1 million on assets of $298.6 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $250.1 million on deposit at 6 offices in multiple states run by 70 full-time employees. With that footprint, the bank currently holds loans and leases worth $223.0 million, including $109.4 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, FirsTier Bank 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 major criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial fortitude, capital is key. When it comes to safety and soundness, the higher the capital, the better.

FirsTier Bank exceeded the national average of 13.13 points on our test to measure capital adequacy, scoring 22 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. FirsTier Bank's Tier 1 capital ratio was 16.29 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, FirsTier Bank held equity amounting to 15.09 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine 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 extensive holdings of these types of assets means a bank could eventually have to use capital to absorb losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and elevating the risk of a failure in the future.

FirsTier Bank scored 32 out of a possible 40 points on Bankrate's asset quality test, coming in 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, 1.76 percent of FirsTier Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on FirsTier Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

FirsTier Bank exceeded the national average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for FirsTier Bank was 11.07 percent, above the national average of 8.10 percent.

The bank recorded net income of $4.8 million on total equity of $45.1 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.73 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.