Safe and Sound

Legends Bank

Linn, MO
5
Star Rating
Legends Bank is a Linn, MO-based, FDIC-insured bank dating back to 1913. As of December 31, 2017, the bank held equity of $45.8 million on assets of $349.9 million.

U.S. bank customers have $298.1 million on deposit at 10 offices in MO run by 83 full-time employees. With that footprint, the bank holds loans and leases worth $259.5 million, including real estate loans of $199.8 million.

Overall, Bankrate believes that, as of December 31, 2017, Legends Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is crucial. It works as a bulwark against losses and affords protection for accountholders during times of economic instability for the bank. From a safety and soundness perspective, more capital is better.

On our test to measure capital adequacy, Legends Bank achieved a score of 16 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Legends Bank's Tier 1 capital ratio was 18.07 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, Legends Bank held equity amounting to 13.10 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.

Having large numbers of these kinds of assets suggests a bank could eventually have to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, Legends Bank scored 36 out of a possible 40 points, coming in below the national average of 37.49 points.

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, 0.68 percent of Legends 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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Legends Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. However, banks that are losing money are less able to do those things.

Legends Bank did above-average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Legends Bank was 7.14 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $3.7 million on total equity of $45.8 million. The bank experienced an annualized return on average assets, or ROA, of 1.07 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.