Safe and Sound

Lincoln FSB of Nebraska

Lincoln, NE
3
Star Rating
Founded in 1906, Lincoln FSB of Nebraska is an FDIC-insured bank based in Lincoln, NE. The bank has equity of $41.8 million on assets of $337.2 million, according to December 31, 2017, regulatory filings.

With 96 full-time employees in 14 offices in NE, the bank has amassed loans and leases worth $216.8 million, including real estate loans of $220.4 million. U.S. bank customers currently have $249.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Lincoln FSB of Nebraska exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial strength. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, Lincoln FSB of Nebraska achieved a score of 16 out of a possible 30 points, above the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Lincoln FSB of Nebraska's Tier 1 capital ratio was 23.12 percent, exceeding 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, Lincoln FSB of Nebraska held equity amounting to 12.38 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due 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. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

Lincoln FSB of Nebraska scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 1.85 percent of Lincoln FSB of Nebraska'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 handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve 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 Lincoln FSB of Nebraska's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

Lincoln FSB of Nebraska underperformed the average on Bankrate's earnings test, achieving a score of 2 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Lincoln FSB of Nebraska's most recent annualized quarterly return on equity was 0.73 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $301,000 on total equity of $41.8 million. The bank had an annualized return on average assets, or ROA, of 0.09 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.