Safe and Sound

Great Plains State Bank

Petersburg, NE
4
Star Rating
Started in 1920, Great Plains State Bank is an FDIC-insured bank based in Petersburg, NE. The bank has equity of $16.4 million on $163.1 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $143.8 million on deposit at 3 offices in NE run by 19 full-time employees. With that footprint, the bank has amassed loans and leases worth $134.5 million, including real estate loans of $90.9 million.

Overall, Bankrate believes that, as of December 31, 2017, Great Plains State Bank 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

Capital acts as a bulwark against losses and provides protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial strength, capital is valuable. From a safety and soundness perspective, more capital is better.

On our test to measure the adequacy of a bank's capital, Great Plains State Bank received a score of 12 out of a possible 30 points, coming in below the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Great Plains State Bank's Tier 1 capital ratio was 11.69 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Great Plains State Bank held equity amounting to 10.08 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 troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets suggests a bank could eventually have to use capital to absorb losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Great Plains State Bank scored 40 out of a possible 40 points, above 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, 0.78 percent of Great Plains State Bank'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 to deal with 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 handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Great Plains State Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses lessen a bank's ability to do those things.

Great Plains State Bank underperformed the average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Great Plains State Bank's most recent annualized quarterly return on equity was 6.58 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $963,000 on total equity of $16.4 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.