Safe and Sound

Foundation One Bank

Waterloo, NE
4
Star Rating
Waterloo, NE-based Foundation One Bank is an FDIC-insured bank founded in 1905. As of December 31, 2017, the bank had equity of $12.5 million on $100.3 million in assets.

Thanks to the work of 21 full-time employees in 2 offices in NE, the bank holds loans and leases worth $86.1 million, including real estate loans of $62.9 million. The bank currently holds $78.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Foundation One Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for account holders when a bank is experiencing financial instability. Therefore, a bank's level of capital is a useful measurement of a bank's financial resilience. When it comes to safety and soundness, the more capital, the better.

Foundation One Bank beat out the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Foundation One Bank's Tier 1 capital ratio was 13.52 percent, above the 6 percent level regulators consider adequate, but less 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, Foundation One Bank held equity amounting to 12.49 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

Having lots of these types of assets means a bank may have to use capital to cover losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, Foundation One Bank scored 40 out of a possible 40 points, exceeding 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, 0.06 percent of Foundation One 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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Foundation One Bank's loan loss allowance was 1,347.06 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

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

Foundation One Bank received below-average marks on Bankrate's earnings test, achieving a score of 10 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Foundation One Bank's most recent annualized quarterly return on equity was 4.85 percent, below the national average of 8.10 percent.

The bank recorded net income of $576,000 on total equity of $12.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.58 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.